Oil Prices Fall to $80/Barrel After Middle East Peace Deal; Irish Energy Costs Remain High

Oil prices have fallen to around $80 per barrel following a Middle East peace deal, down from $118 on March 31 and $60 at the start of the year. This drop, if sustained, will eventually lower petrol and diesel prices, but not immediately due to damaged energy infrastructure and the 50-day tanker journey to Europe after the Strait of Hormuz reopens.

Ireland faces continued high costs for food, natural gas, and electricity. Flogas, Electric Ireland, Pre-Pay Power, and Yuno Energy announced electricity increases of 8-10.9% and natural gas increases of 7.7-11.8%. The government's excise cuts on petrol (15 cent/litre) and diesel (20 cent/litre) expire at the end of July. Tánaiste Simon Harris stated the government would review these cuts within two weeks, acknowledging infrastructure damage, which suggests a possible extension.

Economically, falling oil prices make extending excise cuts harder to justify. Politically, the government faces pressure to reintroduce electricity credits, which cost the State €550 million for the €250 credit paid across late 2024 and early 2025. The Central Bank and ESRI advocate for targeted social welfare supports over universal credits, which benefit all 2.2 million electricity accounts, including wealthy households.

Other challenges include a paused Carbon Tax rise until October and continued food cost increases due to higher fertilizer prices. The Central Bank forecasts 3.5% inflation this year and 2.9% in 2027, warning that a severe scenario with oil at €120 per barrel could push inflation to 5%, causing real wages to fall. Despite efforts to reduce reliance on fossil fuels, Ireland's economy remains vulnerable to global oil price fluctuations.