Irish companies brace for Middle East fallout as energy shock ripples through markets. Businesses weigh supply chain risks and inflation pressures as geopolitical uncertainty tests global resilience.
Irish companies are assessing how far the latest upheaval in the Middle East will spill into energy markets, inflation expectations and supply chains, according to senior economists and corporate advisers.
Conall Mac Coille, chief economist at Bank of Ireland, said markets had been shaken by a rapid shift in sentiment.
“The views in markets may change quickly, but for now pricing reflects a belief that inflation pressures will be difficult to contain if disruption persists”
“We have seen sharp declines in equity markets in recent days. Risk aversion and inflation fears have driven significant moves across financial markets,” he said.
Market jitters
Oil prices jumped after threats to energy infrastructure, with Brent crude trading at about 84 dollars a barrel, up from 71 dollars a week earlier. Natural gas prices also spiked after Qatar temporarily shut down LNG facilities that account for roughly a fifth of global supply. Futures markets still suggest investors expect the disruption to ease, with contracts for 2026 pointing to lower prices.
Bond markets, however, are signalling deeper concerns over inflation. Mac Coille noted that three year swap rates had climbed by 15 to 20 basis points, and options markets were now assigning a one in five chance that the European Central Bank could raise rates by the end of 2026.
“The views in markets may change quickly, but for now pricing reflects a belief that inflation pressures will be difficult to contain if disruption persists,” he said.
Shipping through the Strait of Hormuz remains a critical pressure point. Roughly a fifth of global oil and LNG trade passes through the narrow channel.
Any sustained disruption could increase freight and insurance costs, raising the price of consumer goods imported from Asia. While the Middle East accounts for just 2 per cent of Irish goods exports and 3 per cent of imports, indirect effects on global supply chains may be more significant for Irish firms.
Equities have been hit hard, particularly in Europe. The Stoxx Europe 600 fell sharply before recovering slightly on Wednesday, though it has erased much of the year’s early gains. Strong performance in US technology stocks had helped offset geopolitical concerns in 2025 but that support has weakened.
Mac Coille described recent volatility as notable. “It is striking that equity market volatility has picked up this time. Gains in AI technology stocks are no longer providing the same buffer against uncertainty,” he said.
For households, the most immediate impact will be at the petrol pump. The link between wholesale gas prices and domestic bills is less direct due to hedging, leaving utility companies with more discretion on timing.
Irish CPI inflation forecasts may need to be nudged higher, Mac Coille said, although elevated household savings could cushion the blow. The savings rate stood at nearly 15 per cent in late 2025. “Energy costs will be more challenging for households on lower incomes who have smaller savings buffers,” he added.
Advice for employers
Corporate advisers say Irish employers with international operations are already responding to the disruption.
Michael Rooney, tax partner at EY Ireland, said firms with mobile staff in the region were adapting quickly. “Employers need clear emergency provisions for internationally mobile employees and robust business continuity planning,” he said.
EY is advising businesses to map staff locations, prepare alternative office sites where employees can be redeployed, plan for immigration and administrative delays, and rely on verified government or consular updates.
Rooney said companies should “communicate clearly with employees on relocation support, emergency travel, family assistance and any changes to hardship allowances,” emphasising that many authorities in the region are operating with reduced capacity.
Despite the uncertainty, economists say Ireland and other advanced economies have weathered significant geopolitical risk in recent years.
Mac Coille noted that global activity remained resilient through the trade tensions of the Trump presidency. But he cautioned that the duration of the current disruption in the Middle East will determine the economic impact. “The key issue is how long political uncertainty and military action persist,” he said.
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