After months of turbulence that rippled from the Middle East into everyday shopping baskets and utility bills, consumers are finally seeing a hint of respite as oil prices retreat following a shaky peace deal.
Yet the after-effects of the Strait of Hormuz blockade are set to linger well beyond the point at which shipping lanes fully reopen and tankers resume their normal routes.
In Ireland and elsewhere, households are still bracing for higher costs for essentials such as food, natural gas and electricity after four months of disruption that rattled global energy markets.
At the start of the year, oil traded at about $60 per barrel. With the outbreak of war, prices surged, doubling to $118 on 31 March.
From mid-May, repeated assurances of an impending breakthrough from US President Donald Trump helped to cool the market.
Now, with a resolution of sorts announced, oil has eased back to roughly $80 per barrel.
Oil prices from January to June 2026 – prices in dollars
If the deal holds, motorists should eventually see cheaper petrol and diesel at the pumps — but the relief will not arrive overnight.
Fuels for Ireland, the lobby group representing forecourt retailers, has warned that damage to energy infrastructure remains a constraint, with up to 5% of refineries impacted.
Even with the Strait of Hormuz fully reopened — a process that may itself take time — supply chains move slowly: it takes about 50 days for tankers to reach Europe.
Against that backdrop, the Government moved in late March to soften the blow by cutting excise on petrol by 15 cent per litre, diesel by 20 cent per litre, and marked agricultural diesel by three cent.
Those temporary reductions are due to expire at the end of July unless ministers decide to extend them.
Asked about the issue this week, Tánaiste and Minister for Finance Simon Harris said the Government would consider the matter in the next two weeks.
Tánaiste Simon Harris may be open to continuing excise cuts
He also pointed to the damage to energy infrastructure — a reference that suggests he may be open to rolling the excise cuts forward.
From a purely economic standpoint, it becomes harder to justify maintaining those reductions if oil prices continue to slide.
But across the wider economy, the full hit from the energy shock has not yet worked its way through to households.
Flogas, Electric Ireland, Pre-Pay Power and Yuno Energy have all announced rises for electricity of between 8% and 10.9%, alongside increases for natural gas of between 7.7% and 11.8%.
For thousands of households, those hikes will bite most sharply when consumption climbs again in the autumn.
And once the Dáil returns from its summer break in September, the Opposition is expected to intensify pressure on the Government to introduce additional consumer supports in October’s Budget.
A central question is whether the coalition of Fianna Fáil, Fine Gael and Independents will bring back electricity credits.
In recent years, these payments have carried a heavy price tag for taxpayers.
One example: the €250 credit paid across late 2024 and early 2025 cost the State €550m.
Because the credits go to all 2.2 million electricity accounts, they benefit higher-income households as well as those who are vulnerable.
That structure also means someone with a primary home and a holiday home receives twice as much as a person who owns or rents a single property.
Electricity credits have been enormously expensive for taxpayers in recent years
Both the Central Bank and the Economic & Social Research Institute have argued the coalition should instead target supports through the social welfare system so they reach those who are less well-off.
Politically, however, that approach may not satisfy TDs seeking to help the “squeezed middle” — those not covered by social welfare supports but struggling as household incomes weaken.
Another complication is that once electricity credits are introduced, they can be difficult to unwind, and any minister who ends them can expect to be excoriated in the Dáil.
In April, the Government paused a scheduled rise in Carbon Tax until October.
Reinstating that increase in the autumn is likely to be controversial as well, because it would raise the price of fossil fuels at exactly the wrong moment for many households.
Alongside rising energy costs, the recent uptick in food prices is also expected to persist.
Many crops produced using higher-priced fertiliser have yet to be harvested and make their way to supermarket shelves.
This week, the Central Bank warned that elevated inflation is eroding household incomes.
Wages have been growing at about 4% per year, but once the higher cost of living is factored in, pay is projected to rise by only 0.5% in real terms this year.
The bank has lifted its inflation forecast, projecting 3.5% this year and 2.9% in 2027.
It also cautioned that in a severe scenario — where oil jumps to €120 per barrel — inflation could reach 5%.
In that event, wages would fall in real terms.
Beyond the immediate price swings, the past months have underlined a wider lesson about vulnerability to global shocks.
Despite years of efforts to move away from fossil fuels — much of which comes from some of the world’s most politically unstable regions — Ireland and other countries remain tightly bound to oil.
Its influence runs through transport and distribution, food production, heating, electricity, manufacturing and gas, among other areas.
Even setting climate change aside, the more Ireland and other countries can reduce their reliance on oil, the better insulated consumers will be from the next upheaval.
