The Balearic Islands Builders’ Association warned today, Wednesday, that rising oil prices and energy costs resulting from the war in Iran are jeopardising construction projects. In a statement, the association explained that the conflict is having a direct impact on the operating costs of construction companies, whose heavy machinery and logistics are critically dependent on this fuel.
In addition, they added, it will inevitably lead to a further rise in the price of construction materials due to a domino effect. They added that the increase in oil prices is making the entire supply chain more expensive. On the one hand, the cost of logistics transport is skyrocketing and, on the other, the extractive and materials manufacturing industries - which are highly dependent on energy - are being forced to pass on their extra costs to end products such as cement, steel, aluminium and ceramics, among others.
The association pointed out that the sector has already been experiencing exorbitant cost increases since the pandemic. At the beginning of 2026, construction costs in the Balearics remain between 30 and 35 per cent above pre-pandemic levels.
In one week, the price of diesel in the Balearics has increased by 30 cents per litre, representing a 25 per cent increase. Translated into a practical example in the sector, the cost of filling the tank of an excavator has risen by between €75 and €100 more for just one and a half days’ use.
Faced with this emergency scenario, the association has asked the regional government to convey to the central government the urgent need to adopt solutions that have already proven effective in previous crises, such as diesel subsidies, a review of public contract prices, a reduction in the tax burden and a review of tender prices for contracts lasting more than one year.
According to the group, if urgent measures are not taken, there could be a standstill in both public and private works. In the field of public works, they have warned that the situation is critical, and they believe that if the administration does not update tender budgets to reflect market realities, there will be another increase in unsuccessful tenders.
In private works, the extension of the conflict over time may cause problems in executing housing developments within the required deadlines and lead to unwanted cost increases in the current housing emergency scenario, they explained.