Oil Price Surge Threatens Irish Construction Sector, Amplifies Cost Concerns

Dublin, Ireland – March 23, 2026 – A sharp increase in global oil prices is raising significant concerns within the Irish construction industry, threatening to further accelerate already substantial cost increases. The Construction Industry Federation (CIF) has warned that the volatility in global markets, fueled by the recent escalation of conflict in the Middle East, poses a serious risk to project viability and the overall health of the sector.

Rising Costs and Industry Concerns

The CIF’s Q1 2026 Outlook Survey, conducted between January 30th and February 24th – prior to the recent surge in oil prices – already revealed that 79% of construction companies experienced a year-on-year increase in raw material costs during the fourth quarter of 2025. A further 77% anticipate continued increases in raw material costs throughout the first quarter of 2026.

Andrew Brownlee, Chief Executive of the CIF, emphasized the “deeply alarming” scale and speed of the oil price spikes since the outbreak of war on February 28th. He highlighted that fuel is a critical cost driver for the industry, underpinning both the manufacture and transport of construction materials, as well as day-to-day business operations.

“As a small island economy, transportation and logistics form a major component of our material costs, so shocks of this magnitude have an outsized impact on construction project viability,” Brownlee stated.

Impact on Public Works Contracts

The survey also indicated a growing “wait-and-see” approach to public projects, with 73% of companies reporting no or low involvement in Public Works Contracts during the fourth quarter of 2025, and 71% expecting similar levels of involvement in Q1 2026. Administrative hurdles and low margins on public works contracts were cited as primary challenges for those anticipating reduced involvement.

Despite these challenges, 19% of companies expect their involvement in Public Works Contracts to increase over the next 12 months. The CIF maintains that structural barriers, including planning delays, legal challenges, and infrastructure deficits, remain the primary constraints on project delivery, rather than labor or skills shortages.

Broader Economic Context

The concerns within the Irish construction sector mirror broader global trends. Rising energy costs are impacting the prices of key construction inputs such as aluminum, and cement. Disruptions to shipping routes, particularly through the Strait of Hormuz, are adding to logistical challenges and increasing costs.

Oil prices have already seen significant increases, with a reported 8% rise in the current quarter and are 32% above 2019 levels.

Looking Ahead

The CIF is focused on driving competitiveness and productivity to ensure the successful delivery of projects within the National Development Plan (NDP) allocation of €102.4 billion (2026-2030). However, the industry requires clear and traceable project pipelines to maintain business certainty and prevent firms from seeking opportunities in international markets.

Employment levels in the construction sector rose in the fourth quarter of 2025, particularly in larger firms, and broad-based growth is anticipated for the first quarter of 2026.