This week, the Irish public felt the first direct effects of the war in Iran as energy prices spiked following the disruption of oil and gas supplies from the Middle East. UK gas prices jumped from approx. 70 to 155 GBp/therm, and the price of Brent crude rose from $65 to over $80/barrel. While these increases are sharp, they do not come close to the peaks seen around the time of Russia’s invasion of Ukraine. At that time, these benchmarks rose above 600 GBp/therm and $115/barrel respectively.
Irish policymakers were nonetheless forced to respond to allegations of “price gouging” in the domestic fuel industry. The Irish Times reported on Wednesday evening that the price of a 500-litre fill of home heating oil increased by more than 50% in less than a week.
In response, Enterprise Minister Peter Burke announced that he had asked the Competition and Consumer Protection Commission to urgently investigate claims around price gouging and unfair market practices. This came as Kevin McPartland, CEO of Fuels for Ireland, denounced these claims as ‘completely false’.
The bigger question is how Government will react if wholesale energy prices continue to rise or remain elevated for a prolonged period. During the energy price crisis of 2022, the Government introduced a suite of household financial supports, including a series of universal ‘energy credits’ to directly subsidise household energy bills.
Policymakers may come under pressure to repeat that trick if the current situation deteriorates. However, new EU fiscal rules – which came into effect in April 2024 – may limit their room for manoeuvre. For the time being at least, Government will no doubt try to hold the line and hope that global energy markets stabilise.
Political Update
Conflict involving Iran raises evacuation, energy and diplomatic pressures for Government
The escalation of the conflict between Iran and the US and Israel has seen widespread disruption in the Middle East, and in global energy markets and shipping routes. Closer to home, the situation is also creating immediate challenges for the Irish Government, including the evacuation of citizens from the Gulf region, rapidly rising energy costs at home and growing geopolitical pressure ahead of the Taoiseach’s St Patrick’s Day visit to Washington.
The Department of Foreign Affairs is coordinating charter flights for Irish citizens who are currently stranded in the region. These include some 2,000 Irish citizens that were travelling or in transit when the conflict broke out, and an estimated 22,000 Irish citizens living across the wider region, who may require assistance if the conflict expands.
Thus far, two commercial flights have arrived in Dublin, while the first government-chartered flight is due to arrive from Oman today. Government have been criticised by Sinn Féin for the cost of the flight, priced at €800; almost twice that of the UK charter flights. However, Minister for Foreign Affairs Helen McEntee has defended the cost, saying the price of the flight is "substantially reduced compared to the overall cost". The Irish embassy in the United Arab Emirates confirmed that children can travel for free and elderly citizens or those with medical conditions will be prioritised.
The conflict has also had an immediate effect on global energy markets, with oil prices already having risen substantially. Industry groups warn that diesel could approach or exceed €2 per litre if disruption continues, particularly if shipping through the Strait of Hormuz, a route carrying roughly 20% of global oil supply, is affected.
The crisis is also creating a sensitive diplomatic backdrop for Ireland, one week out from the annual St Patrick’s Day visit to the White House. Minister McEntee has indicated that Ireland’s concerns about US-Israeli military action will be raised directly with President Donald Trump.
Economic Update
Central Bank warns of rising geopolitical and technological risks to financial system
The Central Bank of Ireland has warned that the risks facing the country’s financial system are increasing, driven by geopolitical tensions, rapid technological change and volatility in global markets. In its Regulatory and Supervisory Outlook for 2026, the Bank said operational risks for financial firms remain “very high”, reflecting the growing complexity of business models and the increasing digitalisation of financial services. Geopolitical instability and cyber threats were also highlighted as key vulnerabilities for the sector.
The regulator also noted rising risks in financial markets, warning that elevated asset valuations in areas such as equities and private credit could increase the likelihood of market corrections. At the same time, the rapid adoption of artificial intelligence and reliance on digital infrastructure are creating new operational and consumer protection risks for financial institutions.
Despite these concerns, the Central Bank said inflation, which had been a dominant economic risk in recent years, has eased and is no longer considered a primary threat to financial stability.
Sustainability Update
EU approves new 2040 target for 90% emissions reduction
EU member states have given final approval to a new climate target requiring a 90% reduction in greenhouse gas emissions by 2040 compared with 1990 levels, strengthening the bloc’s pathway to achieving climate neutrality by 2050. The measure amends the EU Climate Law and establishes a binding intermediate milestone between the existing 2030 target of at least a 55% emissions reduction and the long-term goal of net-zero emissions by mid-century.
For businesses, the target provides a clearer long-term signal on the direction of EU climate and energy policy. Heavy industry, energy producers and the transport sector are expected to accelerate decarbonisation plans. The agreement also allows for some flexibility for member states. Countries will be permitted to meet a limited portion of the target through international carbon credits and other mechanisms designed to help manage the cost of the transition.
EU policymakers say the target is intended to balance climate ambition with economic competitiveness and energy security, while providing a long-term emissions trajectory to guide investment decisions and support the development of clean-technology industries across Europe.
Around the World
China expected to set economic growth target of around 5% at annual political congress
China is expected to announce a GDP growth target of between 4.5% and 5% at the annual meeting of the National People’s Congress (NPC) in Beijing this week, signalling the government’s economic priorities for the year ahead.
The NPC is China’s national legislature and the country’s most important annual political gathering, bringing together nearly 3,000 delegates to approve laws, economic targets and policy priorities. This year’s meeting will also outline a new five-year development plan for 2026–2030, setting the direction for economic growth, technology and industrial policy.
Analysts expect the plan to address “involution”, a term used to describe excessive competition between companies that erodes profits and innovation, while also promoting the development of China’s “low-altitude economy”, including the expansion of drones and other low-flying technologies in logistics and infrastructure.