Managing the impact of rising fuel costs on your farm business

Global oil prices have surged past $100 a barrel following the US-Israel strikes on Iran, sending fuel and heating oil costs soaring across Ireland. The Government has responded with an emergency package of measures. Here is what has happened, what has been announced, and the practical steps your farm business should be taking right now.

What has happened?

US and Israeli military strikes on Iran began on 28 February 2026, triggering a major disruption to global oil supply. Iran responded by effectively closing the Strait of Hormuz - through which roughly one fifth of the world’s oil normally flows - sending Brent crude surging past $100 per barrel, up more than 50% since the conflict began.

In Ireland, the impact has been swift and severe. Home heating oil jumped more than 50% in a single week, green diesel has been particularly hard hit, and diesel at the pump has risen sharply across the country. Although most of Ireland’s fuel comes from the North Sea, energy prices are set globally - so disruptions of this scale are felt here regardless. Fertiliser costs are also under pressure, as gas is a key input in nitrogen production.

Government measures

Following significant public and political pressure, the Government recently announced an emergency fuel package worth €235 million. Measures have been described by Taoiseach Micheál Martin as “temporary and targeted”, running until 31 May 2026 with a review depending on how markets develop.

Mineral Oil Tax (MOT) reductions

Temporary reductions in MOT rates apply on a VAT-inclusive basis:

• Petrol: 15 cent per litre reduction

• Auto diesel: 20 cent per litre reduction

• Green diesel (marked gas oil): 3 cent per litre reduction

NORA levy

The National Oil Reserves Agency (NORA) levy will be reduced by 2 cent per litre to a nominal amount for two months. This applies to petrol, auto diesel and home heating oil.

Diesel rebate scheme

For hauliers and passenger bus operators, the maximum repayment under the Diesel Rebate Scheme has been increased from 7.5 cent per litre to 12 cent per litre. This applies to diesel purchased between 1 January and 30 June 2026. If your farm relies on contracted haulage or agricultural contractors, ensure they are aware of this - it should reduce some of the cost pressure they face, and ideally that will be reflected in what they charge you.

Fuel allowance

The fuel allowance season will be extended by an additional four weeks. The approximately 470,000 households in receipt of the fuel allowance will receive an additional €38 per week, totalling €152 in additional support.

Practical steps for your farm right now

1. Don’t panic-buy, but do plan ahead

Supply to Ireland remains stable - most of our fuel comes from the North Sea, not the Middle East, and there is no physical shortage. Panic-buying risks driving prices higher and creating unnecessary cash flow pressure. That said, if you have storage capacity for green diesel or kerosene and can afford to, locking in a volume at today’s price with a reputable supplier - and getting any quote confirmed in writing before you commit - is a sensible precaution against further increases.

2. Be alert to price gouging - and report it

There have been verified reports of suppliers voiding quotes from only days earlier and charging 25% or more above the previously agreed price. Farming organisations have been inundated with such complaints in the days following the outbreak of the conflict. This is unacceptable. The CCPC has been formally asked by the Energy Minister, Darragh O'Brien, to investigate pricing practices. If you believe you are being charged disproportionately - or if tonight’s excise cuts are not passed on - report it at www.ccpc.ie or call 01 402 5555.

3. Audit your fuel consumption immediately

Now is the moment to go through farm operations line by line and identify where diesel and heating oil are being used. Look at:

◦ Tractors and machinery - review field operations and consolidate runs where possible

◦ Grain and crop drying - optimise dryer settings and only dry when necessary

◦ Livestock buildings - review heating requirements as we move into spring

◦ Farm transport - minimise empty runs and consolidate deliveries

Even a 10–15% reduction in consumption has a significant cash impact when prices are at this level.

4. Review input costs linked to oil

It is not just direct fuel costs that are under pressure. Fertiliser prices are closely tied to energy prices, particularly gas, which is used in the production of nitrogen fertiliser. Some advisors are already recommending that farmers consider forward purchasing fertiliser for the coming months. Discuss with your agronomist whether this makes sense for your holding and cash flow position.

5. Check your machinery efficiency

This is a good time to ensure that tractors and machinery are running as efficiently as possible. Tyre pressures, engine servicing and fuel filters all have a direct impact on consumption. An under-serviced tractor can burn 10–20% more diesel than it should - an expensive inefficiency at any time, and particularly so right now.

Thinking longer term: energy resilience on the farm

Crises like this one have a way of concentrating minds on energy dependency, and the case for investing in on-farm renewable and alternative energy has rarely been stronger. SEAI grants and TAMS III supports are available across a range of technologies, and the payback period on these investments is considerably shorter when oil prices are elevated. Options worth exploring include solar PV, small to medium scale wind turbines etc. We would encourage clients to get in touch to discuss what might be most suitable for your farm - the right combination will depend on your enterprise type, land, buildings and capital position.

The Outlook

The honest answer is that nobody knows how long this conflict will last or where oil prices will ultimately settle. What we do know is that the Government has now acted, bringing partial and immediate relief from tonight. Irish farmers navigated a significant energy shock in 2022 following the Russian invasion of Ukraine - when Irish inflation hit nearly 10% annually - and emerged from it. The same resolve and pragmatism will be needed now.

Duration is everything. A swift de-escalation of the conflict or coordinated strategic reserve releases by the G7 and International Energy Agency, could ease prices relatively quickly. A prolonged closure of the Strait of Hormuz, on the other hand, could push oil significantly higher still. Monitoring developments closely and remaining financially flexible is the wisest position to hold right now.

Key message

You need to make sure you are availing of the Government's initiatives.

Beyond that, stay calm, act smart, reduce what you can control and keep a close eye on further Government announcements as the situation continues to develop.

ifac are available nationwide to assist you and your farm with any questions relating to this current crisis. Get in touch.

Talk to Philip O'Connor

Head of Farm Support052 7441772 farmsupport@ifac.ie Linkedin