Analyst warns of more fuel price hikes to come

Despite the ceasefire announced on Wednesday, the worst of the fuel price crisis is yet to come, according to S&P Global energy analyst Daniel Evans.

Speaking on an IFA fuel crisis webinar, Evans said that the market hasn’t yet priced in the threat of a lack of availability of oil.

“This is the biggest oil shock ever,” he said, saying the volumes of oil that are trapped inside the Persian Gulf are huge, with 20% of the global market unable to leave the Gulf.

He said that the duration of the crisis is key and the longer the trouble in the Middle East persists, the greater the problems will be in Europe.

“One of the reasons why we feel there is potentially more disruption on the horizon is that the ships that left the Gulf at the end of February are still arriving in Europe.

“Typically, it takes a tanker 40 to 50 days to get from the Gulf to Europe, but we are heading for a cliff edge as that tanker traffic has basically gone to zero.

“So in the next week or two weeks, that last bit of supply that was coming out of the Middle East is going to dry up and that’s when, in our view, we will start to see real concerns about the physical availability of diesel starting to emerge in the market,” he said.

Bill O’Keeffe, chair of IFA farm business committee, said that the organisation had a constructive meeting with Government on the topic of fuel prices, but said that removing the carbon tax was “off the table” by Government.

On fertiliser, Angelo Salton from S&P Global said that the availability and price of fertilisers is unlikely to worsen further until later in the year and into the autumn.

Interestingly, he said that the availability of urea is unlikely to be as affected as CAN. He also said that the availability of sulphur is likely to be very curtailed as the Middle East is a major global manufacturer.

IFA analysis

Looking at the impact on Irish farmers, IFA chief economist Tadhg Buckley says the organisation predicts that for 2026 as a whole, fertiliser costs will increase by 33%, machinery operating costs will increase by 25%, machinery hire will increase by 20%, bulky feeds will increase by 20% and concentrate feed costs will increase by 5%.

“From a dairy perspective, you would be seeing [total] costs go up by just under 5c/l extra due to the Middle East crisis alone,” he said.

On tillage, he said that the cost to produce one tonne of barley is set to go up by €22/t and the cost to keep a suckler cow is set to go up by €193/head.

“Something needs to be done on the carbon tax because if you want to do something else for green diesel, you don’t really have any other option because all other non-carbon tax measures have been exhausted.

“To add insult to injury, on 1 May carbon tax is due to increase by 2c/l and we estimate that since the introduction of carbon tax, Irish farmers have paid about €1bn in carbon tax either directly or indirectly from their farm businesses,” he said.

Buckley also said the IFA is calling for a temporary suspension of CBAM on nitrogen fertiliser.