How the War in Iran Is Affecting UK Construction Material Prices in 2026

The conflict in Iran has moved from the news pages to the balance sheets of UK construction businesses faster than most people anticipated. What began as a geopolitical crisis in the Middle East is now showing up in supplier price lists, fuel surcharges, and tender returns across the country.

At Page Building Consultants, we track live material and labour costs across the UK as part of our estimating work. Over the past several months, we've seen a clear and measurable impact on the cost of key construction materials — and the situation is still evolving.

This article explains exactly which materials are being affected, why, and what contractors, developers, and homeowners should do to protect their budgets in 2026.

Why Does a War in Iran Affect UK Building Costs?

To understand the impact, you need to understand the geography. Iran borders the Strait of Hormuz — the narrow waterway through which approximately 20% of the world's traded oil passes every day. When conflict escalates in the region, shipping insurers raise premiums, tanker operators reroute or reduce sailings, and oil markets price in the risk of supply disruption.

Higher oil prices don't just affect petrol at the pump. Energy is a fundamental input cost in the manufacture of almost every construction material. Steel requires enormous amounts of energy to smelt. Cement kilns run on fuel. Insulation boards are made from petrochemical feedstocks. Glass manufacturing is energy-intensive. Even the lorries that deliver materials to your site run on diesel.

The result is a cost shock that ripples through the entire construction supply chain — from raw material extraction to the final delivery on site.

• Strait of Hormuz: ~20% of global traded oil passes through this waterway
• Shipping insurance premiums: Up significantly for vessels operating in the Persian Gulf
• Oil price volatility: Brent crude has seen sharp spikes since the conflict escalated
• Energy cost pass-through: Manufacturers pass higher energy costs directly to buyers
• Fuel surcharges: Hauliers and plant hire companies have introduced or increased surcharges
• Currency effects: Sterling weakness against the dollar amplifies import cost increases

Structural Steel: The Biggest Impact

Structural steel is the material most severely affected by the current situation. Steel production is one of the most energy-intensive industrial processes in the world — a tonne of steel requires roughly 20 gigajoules of energy to produce. When energy costs rise, steel prices follow.

The UK imports a significant proportion of its structural steel, much of it from continental Europe and Asia. Higher shipping costs, elevated energy prices at overseas mills, and increased demand from infrastructure projects competing for the same supply have all contributed to price increases.

Based on our current supplier data, structural steel sections — RSJs, universal columns, hollow sections — have risen by 8–14% since the conflict escalated. For a typical residential extension requiring two or three RSJ beams, this adds £400–£1,200 to the steelwork cost. On a large commercial project with significant structural steel content, the impact can run to tens of thousands of pounds.

Bitumen, Asphalt, and Roofing Felt: Direct Oil Derivatives

Bitumen is a direct derivative of crude oil — it's what's left after the lighter fractions have been refined away. This means bitumen prices track oil prices almost directly, with very little lag.

In the UK construction industry, bitumen is used in flat roofing systems (torch-on felt, modified bitumen membranes), road surfacing and car park construction, and waterproofing membranes for basements and foundations.

Since the conflict began, bitumen and asphalt product prices have risen by 12–20% depending on the specific product and supplier. For a flat-roofed extension or commercial building, this is a material cost increase that can't be avoided — there are no easy substitutes for bitumen in these applications.

• Torch-on felt roofing membranes: Up 12–18%
• Modified bitumen flat roofing systems: Up 14–20%
• Asphalt road surfacing and car parks: Up 10–16%
• Bituminous waterproofing membranes: Up 12–18%
• Roofing felt underlay: Up 8–14%

Insulation: Petrochemical Feedstocks Under Pressure

Modern insulation products — particularly the rigid foam boards that dominate UK new build and extension construction — are manufactured from petrochemical feedstocks. PIR (polyisocyanurate) and EPS (expanded polystyrene) boards both rely on chemicals derived from oil and gas.

This creates a double cost pressure: higher raw material costs from petrochemical feedstocks, and higher manufacturing energy costs. The result has been significant price increases across the insulation market.

This is particularly significant in 2026 because Building Regulations Part L now requires higher insulation standards than ever before. Contractors can't simply specify less insulation to save money — the specification is mandated by law. Higher insulation costs are therefore unavoidable on any new build or extension project.

• PIR rigid foam boards (e.g. Kingspan, Celotex): Up 10–18%
• EPS expanded polystyrene boards: Up 8–15%
• Mineral wool (less affected — not petrochemical): Up 4–8%
• Spray foam insulation: Up 12–20%
• Cavity wall insulation: Up 6–12%

Fuel, Plant, and Haulage: The Hidden Cost Multiplier

One of the most pervasive but least visible impacts of the Iran conflict on UK construction costs is the increase in fuel, plant hire, and haulage costs. Every construction project consumes diesel — in excavators, dumpers, generators, concrete mixers, and the lorries that deliver every material to site.

Diesel prices in the UK have risen 15–22% since the conflict escalated. Hauliers and plant hire companies have responded with fuel surcharges, and some have increased their base rates. This affects every trade on every project — it's a cost that can't be avoided or substituted away.

For a typical domestic extension, the additional fuel cost might be £500–£1,500. For a large commercial project with significant groundworks and plant usage, the impact can be £10,000–£50,000 or more.

• Diesel fuel: Up 15–22% at the pump
• Plant hire rates: Up 8–15% including fuel surcharges
• Haulage and delivery: Up 10–18% including fuel surcharges
• Skip hire: Up 8–14%
• Concrete delivery (ready-mix): Up 6–12% (fuel component of delivery cost)
• Crane hire: Up 10–16%

PVC, Plastics, and Pipework

PVC (polyvinyl chloride) is another petrochemical product that's feeling the pressure. PVC is used extensively in UK construction for drainage pipes, window frames, fascias and soffits, electrical conduit, and damp proof courses.

The feedstock for PVC — ethylene — is derived from oil and gas. Higher feedstock costs, combined with higher manufacturing energy costs, have pushed PVC product prices up by 6–12% across most product categories.

For most domestic projects, the PVC cost increase is relatively modest in absolute terms — perhaps £300–£800 on a typical extension. But on larger projects with significant drainage, pipework, or window schedules, the impact is more significant.

• UPVC window and door frames: Up 6–10%
• PVC drainage pipes and fittings: Up 8–12%
• Electrical conduit and trunking: Up 6–10%
• Fascias, soffits, and bargeboards: Up 6–10%
• DPC and DPM membranes: Up 8–14%

Cement and Concrete: Secondary but Significant

Cement and concrete are not petrochemical products, but they are highly energy-intensive to manufacture. Cement kilns operate at temperatures above 1,400°C and consume enormous quantities of fuel. When energy costs rise, cement manufacturers pass those costs on.

UK cement prices have risen by 5–10% since the conflict began — a secondary effect of higher energy costs rather than a direct oil price link. Ready-mix concrete has seen similar increases, compounded by higher diesel costs for delivery.

For a typical domestic project, the concrete cost increase might be £200–£600. For a large commercial project with significant concrete frame or groundworks content, the impact can be £20,000–£100,000.

What This Means for Your Project Budget

The cumulative effect of these material price increases is significant. Based on our current estimating data, a typical domestic extension that would have cost £60,000 in early 2025 now costs approximately £65,000–£68,000 — an increase of 8–13% driven primarily by material and fuel cost inflation.

For larger commercial projects, the impact is proportionally greater because they use more of the affected materials — particularly structural steel, insulation, and concrete.

The key message for anyone planning a construction project in 2026 is this: budgets set 12 months ago are almost certainly out of date. If you're working from an estimate produced before the conflict escalated, you need to get it updated before committing to a contract.

• Domestic extensions: Budget increase of 8–13% vs early 2025 estimates
• New build residential: Budget increase of 7–12% vs early 2025 estimates
• Commercial projects with significant steel content: Budget increase of 10–18%
• Groundworks-heavy projects: Budget increase of 10–15% due to fuel and plant costs
• Flat-roofed buildings: Budget increase of 12–18% due to bitumen cost increases

What Contractors Should Do Right Now

If you're a contractor pricing work in the current market, the Iran conflict creates both risk and opportunity. Here's what we recommend:

• Update your material rates immediately — don't price from last year's supplier lists
• Include a material price fluctuation clause in all new contracts — fixed-price contracts in a volatile market expose you to significant risk
• Shorten the gap between estimating and ordering — the longer the gap, the greater the price risk
• Forward purchase key materials where possible — particularly steel and insulation on larger projects
• Review your contingency allowances — 10% is no longer sufficient; consider 15% on projects with significant steel, bitumen, or insulation content
• Be transparent with clients — explain the market conditions and why prices have moved
• Use a professional estimating service that tracks live rates — estimating from memory or outdated data is a recipe for margin erosion

What Homeowners and Developers Should Do

If you're a homeowner or developer planning a project, the current market requires a different approach to budgeting than you might have used in previous years.

First, get a fresh estimate. If your budget is based on figures from more than six months ago, it needs to be updated. The cost increases described in this article are real and material — working from an outdated budget is one of the most common causes of projects stalling mid-construction.

Second, move quickly once you've decided to proceed. In a rising cost environment, delay is expensive. Every month you wait is another month of potential price increases. If you've got planning permission and a contractor lined up, get your contract signed and your materials ordered.

Third, build a larger contingency into your budget. In normal market conditions, a 10% contingency is standard. In the current environment, we recommend 12–15% for domestic projects and 15–20% for commercial projects with significant steel or bitumen content.

Page Building Consultants can produce an up-to-date estimate for your project using live 2026 material and labour rates. We can typically turn around a detailed estimate within 24 hours. Call us on 0800 688 9321 or submit your drawings online.

Will Prices Come Back Down?

This is the question every client asks. The honest answer is: probably not fully, and not quickly.

History tells us that construction material prices rarely return to pre-shock levels after a major geopolitical or supply chain disruption. After the 2021–2022 supply chain crisis, prices stabilised at a level significantly above pre-pandemic norms. The same pattern is likely here.

Some materials — particularly those with direct petrochemical inputs like bitumen and insulation — may see partial relief if oil prices fall when the conflict de-escalates. But labour cost inflation, ongoing supply chain restructuring, and the underlying demand for construction materials from the UK's housing and infrastructure programmes will keep overall costs elevated.

The prudent approach is to budget for current prices, not hoped-for future prices. If costs do come down, you'll have a pleasant surprise. If they don't — or if they rise further — you'll be protected.