Relief is finally reaching consumers as oil prices retreat following a fragile peace agreement in the Middle East.
Yet the fallout from the blockade of the Strait of Hormuz will outlast the return of normal shipping routes.
In Ireland and beyond, households will still face higher bills for food, natural gas and electricity as the disruption of the past four months continues to ripple through the economy.
At the start of this year, oil traded at $60 per barrel, but after war broke out, the price surged to $118 on 31 March.
With a partial resolution now announced, oil has eased back to about $80 per barrel.
Oil prices from January to June 2026 – prices in dollars
If the peace deal holds, that decline should eventually feed through to cheaper petrol and diesel on forecourts – but not straight away.
Fuels for Ireland, the lobby group representing forecourt retailers, says energy infrastructure has been damaged, with as much as 5% of refineries affected.
There is also the question of timing: even after the Strait of Hormuz fully reopens, a process that may itself take time, tankers still need about 50 days to reach Europe.
Back in late March, the Government reduced excise on petrol by 15 cent per litre, cut diesel by 20 cent per litre, and lowered marked agricultural diesel by three cent.
Those reductions are due to lapse at the end of July unless the Government chooses to extend them.
Asked about the matter this week, Tánaiste and Minister for Finance Simon Harris said the Government would examine it over the next two weeks.
Tánaiste Simon Harris may be open to continuing excise cuts
His reference to damage across energy infrastructure suggests he may be prepared to keep the excise cuts in place.
From a purely economic standpoint, though, any continued slide in oil prices would make it harder to defend extending those reductions.
Across the wider economy, meanwhile, the energy shock has not yet fully worked its way through.
Flogas, Electric Ireland, Pre-Pay Power and Yuno Energy have all announced electricity increases ranging from 8% to 10.9%, along with natural gas rises of between 7.7% and 11.8%.
For thousands of households across the country, that will become a serious strain once energy use climbs again in the autumn.
And when the Dáil returns from its summer recess in September, the Opposition is likely to pile heavy pressure on the Government to deliver more help for consumers in this October’s Budget.
One of the biggest political questions is whether the Fianna Fáil, Fine Gael and Independents coalition will bring back electricity credits.
Those payments have come at enormous cost to taxpayers in recent years.
By way of example, the €250 credit paid over late 2024 and early 2025 cost the State €550m.
They go not only to vulnerable households but also to wealthier ones, because all 2.2 million electricity accounts receive them.
That means the owner of both a house and a holiday home receives twice as much as someone who owns or rents just one property.
Electricity credits have been enormously expensive for taxpayers in recent years
The Central Bank and Economic & Social Research Institute have both argued that the coalition should use the social welfare system to target supports at lower-income households.
Politically, however, that approach may offer little comfort to TDs keen to support the “squeezed middle” – people outside the social welfare system who are still struggling as household incomes come under pressure.
The difficulty with electricity credits is that once they are introduced, they tend to become politically hard to remove, and any minister who tries can expect to be fiercely attacked in the Dáil.
In April, the Government postponed a planned increase in Carbon Tax until October.
Bringing that rise back in the autumn is also likely to prove contentious, because it would increase the cost of fossil fuels at precisely the wrong moment.
Alongside higher energy bills, food prices also look set to keep climbing.
Many crops grown with more expensive fertiliser have still to be harvested and make their way onto supermarket shelves.
This week, the Central Bank warned that persistently high inflation is eroding household incomes.
Pay has been increasing by about 4% per year, but after factoring in the higher cost of living, wages will rise by just 0.5% in real terms this year.
The bank has revised up its inflation forecast and now expects it to hit 3.5% this year and 2.9% in 2027.
It has also warned that in a severe scenario, with oil climbing to €120 per barrel, inflation could rise as high as 5%.
In that case, wages would shrink in real terms.
Still, there is a wider lesson in this year’s price shock.
For all the effort spent trying to reduce dependence on fossil fuels – many of them sourced in some of the world’s most politically unstable regions – Ireland and other countries remain deeply bound to the price of oil.
Its reach extends through transport, distribution, food, heating, electricity, manufacturing, gas … and much more besides.
Even leaving climate change aside, the less exposed Ireland and other countries are to oil, the better the outcome is likely to be for consumers.
