Surging oil prices arising from the Iran war are a significant concern for Irish construction firms and will have an impact on their ability to deliver homes and key infrastructure at cost, a new survey of the sector has revealed.
Rising costs were already a concern for builders in the State before the US and Israel first bombed Iran some four weeks ago, according to the Construction Federation of Ireland, leading to retaliatory attacks by the Islamic Republic on energy infrastructure across the region.
Based on a survey of 200 construction companies conducted in February, some 79 per cent of firms said the cost of raw materials had increased over the previous three months.
Some 77 per cent of survey respondents said they anticipated further price increases ahead over the next three months.
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Consequently, more than half of the firms surveyed said they had seen an increase in project pricing over the three months to the end of January.
A similar volume of companies surveyed said pricing increases are expected to continue well into the year.
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“As oil prices surge in the wake of the war in Iran, we are seeing renewed concern across the Irish construction industry about the volatility this is injecting into global markets and its impact on the cost of construction materials and fuel,” said Andrew Brownlee, chief executive of CIF.
“The sector has already been operating in an environment of significant cost inflation for some time. In the fourth quarter of 2025, 79 per cent of firms reported year-on-year increases in raw material costs, and that was before the conflict in Iran began.”
Oil surged past $100 a barrel on Monday morning amid missile salvos across the Gulf region and in advance of US president Donald Trump’s deadline for Iran to reopen the Strait of Hormuz. However, oil prices subsided somewhat after Trump postponed strikes on Iran’s power plants.
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Iran has threatened to close the key maritime choke point on a more permanent basis if the US follows through with rumoured plans to attack its coasts and islands.
Mr Brownlee said the scale and speed of the increases in oil pricing are “deeply alarming” for the Irish construction industry.
“Fuel is a core driver of costs,” he said.
“It underpins the manufacture and transport of construction materials and is a fundamental day-to-day business cost. As a small island economy, transportation and logistics form a major component of our material costs, so shocks of this magnitude have an outsize impact on construction project viability.”
Meanwhile, Mr Brownlee said the construction industry’s total capital expenditure is expected to reach €19.1 billion, amid a surge in house building and infrastructure delivery.
However, he said “structural barriers” remain, particularly around “planning delays, legal challenges, and infrastructure deficits and delivery delays”.
Separately on Monday morning, estate agent Knight Frank said the delivery of 36,284 housing units last year “exceeded expectations” and was “comfortably ahead” of most commentators’ forecasts of between 33,000 and 34,000 units.
However, it said the signals that this “renewed momentum in supply” could be sustained were “less encouraging” as the Government sought to hit annual requirements of 55,000 units a year to 2034 and then 41,000 units annually to 2040.
