Government to review fuel duty cuts as oil prices fall

Tánaiste and Minister for Finance Simon Harris says that the Government will consider whether it should continue temporary cuts on petrol and diesel in the next two weeks.

The Government cut the tax on fuel following a surge in energy prices following the conflict in the Middle East, however, there has been a significant fall in oil prices following the announcement of a peace deal in the Iran war.

The excise reductions are due to expire at the end of July.

Minister Harris said: "The situation remains very fluid and we have seen time and time again how volatile the energy market can be."

He was speaking at the National Economic Dialogue, where unions, employers and voluntary groups are setting out their priorities ahead of the Budget in October.

Taoiseach Micheál Martin told the conference "we cannot mitigate every increase" in energy costs.

But he added: "We have to get long term prices down."

Minister for Public Expenditure and Reform Jack Chambers said that he expected "exploratory discussions" on a new national wage agreement to begin in the "coming days."

Meanwhile, oil prices slipped to a three-month low today after US President Donald Trump and Iran's deputy foreign minister said they had reached an initial deal to end the war and to resume traffic through the Strait of Hormuz.

Brent crude futures fell $4.39, or 5%, to $82.94 a barrel this morning and US West Texas Intermediate was at $80.26, down $4.62, or 5.4%.

Both contracts fell to their lowest levels since March 10 today after tumbling more than 3% on Friday.

The US and Iran will sign a memorandum of understanding in Switzerland on Friday, said the prime minister of Pakistan, whose country has served as a mediator.

Trump said yesterday that the Strait of Hormuz would be open "toll free" and that a US naval blockade of Iranian ports would also end.

Iran's semi-official Mehr news agency said the draft deal called for reopening the Strait of Hormuz within 30 days under Iranian arrangements.

"It will take time for oil to approach the pre-crisis level of 20 million barrels per day sailing through this chokepoint. Estimates of the full resumption of traffic vary from weeks to months," said Tamas Varga, analyst at PVM Oil Associates.

"Financial investors are, therefore, merely borrowing future physical supply, hence the current cheapening of oil prices. The slow resumption will possibly result in a supply deficit throughout 2026," the analyst said.

The world has lost millions of barrels of oil and gas supply since the war closed the Strait of Hormuz, a chokepoint for a fifth of the world's oil and liquefied natural gas supplies, for more than three months.

Investors are also watching cautiously how quickly Middle Eastern producers can resume oil production and exports following damage from the war and whether more ships will enter the region.

"The damage already done cannot be reversed overnight. This includes not only any physical damage to oil infrastructure but also the economic strain endured by oil importing economies that have faced elevated energy costs for months," said Priyanka Sachdeva, senior market analyst at Phillip Nova.

Iran's deputy foreign minister, Kazem Gharibabadi, said a more expansive agreement would be negotiated during a 60-day ceasefire period.

However, Israeli Defence Minister Israel Katz said the military would remain in security zones in Lebanon, Syria and Gaza indefinitely in order to protect the border and Israeli settlements.

The fate of Iran's nuclear programme, another thorny issue, will also be addressed in those later talks, sources previously told Reuters.

David Jorbenaze, global oil market leader at ICIS, sees a "partial recovery in traffic within weeks of a credible deal and meaningful commercial normalisation in the four-to-six-month range."

"Full pre-conflict traffic volume is realistically a 2027 story, and only if the agreement holds without incident and production recovers at pace," he said.

E4 nations, which include the UK, France, Germany and Italy, said yesterday that the countries were prepared to lift sanctions on Iran in response to steps on its nuclear programme.

Additional reporting: Reuters