Impact of US-Iran conflict on Cyprus economy and consumer markets

The escalation of the conflict between US-led forces and Iran has caused significant economic uncertainty in Cyprus, characterized by rising energy costs and market volatility. Following a drone strike on the Ras Laffan LNG plant in Qatar, global oil prices have seen an 18% weekly increase, with Brent crude trading above $85 per barrel and analysts warning of potential peaks up to $150. Locally, refinery prices for the week of February 27 to March 5 showed significant surges, with 95-octane petrol rising 20-25% and diesel and heating oil by 40-45%. Retail fuel prices recently stood at €1.334 per litre for 95-octane unleaded, €1.40 for diesel, and €0.981 for heating oil, with further increases expected. While officials from the Consumer Protection Service warn of direct retail price hikes, fuel supply companies like Petrolina state they have secured alternative procurement routes. Reports of panic buying and empty shelves have been dismissed by the Cyprus Retailers Association as unfounded. The broader economic impact is compounded by the closure of the Strait of Hormuz and increased shipping insurance premiums. Tourism and construction sectors remain vulnerable to these inflationary pressures, though government officials emphasize that the duration of the conflict will be the ultimate determinant of long-term economic stability.