Will Iran-Israel conflict mean a rise in Irish petrol prices?
Analysis: Two key factors will determine if oil prices – and the price you pay for petrol and diesel – increase a little or rise a lot this week
The price we pay for petrol and diesel in Ireland is significantly influenced by events occurring thousands of kilometres from our shores. This week, it is a ‘wait and watch’ moment for the global oil industry as the Israel-Iran conflict escalates.
Ultimately, two key factors will determine if oil prices—and, by extension, petrol and diesel prices—increase a little or rise a lot over this week. Of chief importance is the role of the Strait of Hormuz and the question of whether the United States will become further involved in the conflict after attacking key Iranian nuclear sites.
The Strait of Hormuz, located in southern Iran, is a narrow corridor of water about 100 miles long. It serves as the main transit route from the Gulf for around 25% of the world’s oil supply, including exports from Saudi Arabia, the UAE, Kuwait, Qatar, Iraq, and Iran.
It is considered the world’s most important oil gateway. While other important oil transit routes can be circumvented (albeit with added time and cost), there is no meaningful alternative to the Strait of Hormuz for large-scale oil shipments.
Iran has the capability to close the Strait of Hormuz through military action. If this were to happen, even temporarily, it would have a major impact on global oil markets, causing prices to rise both in Ireland and around the world.
From DW News, why Iran’s control over the Strait of Hormuz is crucial for the world economy
Equally, further direct involvement by the US would likely escalate the conflict and further threaten the region’s energy infrastructure. For US president Donald Trump, it’s not only events in the Middle East that must be considered, but also domestic developments. In the US, this is the start of what the energy industry refers to as ‘driving season’, the summer-related increase in travel and fuel consumption due to better weather and school holidays.
US public political sentiment is highly sensitive to gasoline (petrol) prices, and American drivers are accustomed to relatively low fuel costs. With ongoing economic concerns and the cost of living high on the public agenda, Trump will be acutely aware of the domestic consequences of any military intervention abroad, particularly its impact on international oil prices and domestic gasoline costs
During his first presidency, Trump often reverted to social media to pressure other oil producing countries to increase oil production to lower global prices during times of geopolitical instability. But the current conflict presents a different challenge: the issue is not oil production, but the movement of oil, specifically through the Strait of Hormuz.
Based on what we know today, a limited escalation in the conflict and the weekend’s US attacks on Iran will cause a sharp spike in prices. However, it is unlikely to persist for a long period because the broader global oil landscape is relatively robust.
Last week, the International Energy Agency (IEA) stated that global oil supplies will outstrip demand this year. At the same time, weak consumption in China and the US is expected to reduce global oil demand. Additionally, electric vehicle sales continue to grow globally, putting further downward pressure on oil demand. According to the IEA’s Global Electric Vehicle Outlook 2025, global EV sales exceeded 17 million in 2024 and are expected to surpass 20 million in 2025, representing around one-quarter of all cars sold.
The story with petrol and diesel in Ireland
Is there a worst-case scenario in which a serious escalation of the conflict could lead to petrol and diesel shortages at Irish forecourts? The answer is no.
Ireland was significantly affected by the 1973–1974 oil crisis and, like many countries, learned the hard lesson of the importance of maintaining strategic energy reserves. Today, Ireland physically stores about €1 billion worth of oil products (petrol, diesel, kerosene and crude oil) at various locations across the country, including Galway, Dublin and Foynes. Smaller volumes are also stored abroad and this oil is managed by Ireland’s National Oil Reserve Agency.
These reserves act as a shock absorber for the country and reserves are sufficient to keep the country running for approximately 90 days. In the event of a major physical disruption, this oil would be released to the Irish market but, it’s important to note that this oil is not ‘free’ and would be sold at market prices. In the event of a disruption to oil imports, there will be oil – but it may not be cheap.
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