Currie & Brown: UK construction costs could still rise despite Middle East agreement
Currie & Brown, a world-leading project management, cost management and advisory services firm, has published new research into the impact of oil price volatility on construction markets around the world.
In the UK, steel prices could increase by up to 9.1% by September under a higher oil price scenario. Copper could rise by 5.5% and aluminium by as much as 12.4%. Demand for these materials remains strong, driven by investment in digital infrastructure, energy transition projects and MEP-intensive developments such as data centres and retrofit programmes. As a result, data centre construction costs could increase by up to 6.8%, while hotel projects could see costs rise by around 7%.
The agreement between the US and Iran to bring an end to conflict has begun to ease concerns around oil supply and shipping routes through the Strait of Hormuz. However, a return to normal will take time, and uncertainty remains over where oil prices will settle and how markets will respond in the months ahead.
For the construction industry, the implications extend far beyond fuel costs. Energy prices influence the manufacture and transportation of key materials, including steel, copper and aluminium, as well as supplier pricing, procurement strategies and project delivery. Drawing on historical market data, commodity trends and project cost intelligence, Currie & Brown’s research models a range of potential outcomes under different oil price scenarios.
The global analysis shows that the impact of oil price volatility is unlikely to be felt evenly. In India, steel prices could rise by up to 18%, driven by strong domestic demand and reliance on imports. Singapore, by contrast, could see steel costs increase by 4.3%, partly because major projects have already secured materials through early procurement. The findings highlight how the same market shock can produce very different outcomes across regions.
Nick Gray, chief operating officer, UK and Europe at Currie & Brown, comments: “A peace agreement between the US and Iran may have been reached, but the impact on construction will not disappear overnight. In the UK, we expect the cost of key materials to remain elevated for some time, as higher oil prices continue to feed through supply chains and manufacturing costs.
“For project owners and investors, the challenge is understanding the risks early and building resilience into delivery plans.”
Cost increases affect more than project budgets. They influence the choices organisations need to make. In data centres, where speed to market remains critical, developers may need to look again at procurement, lead times and programme certainty. In hospitality, owners and investors may need to decide where investment will best protect long-term asset value, guest experience and operational performance. Currie & Brown explores these sector-specific considerations in dedicated perspectives on data centre and hotel construction.
All of this uncertainty comes at a time when many organisations are making significant investment and delivery decisions. With demand remaining strong across many sectors, waiting for complete clarity is rarely an option.
Alan Manuel, group chief executive officer at Currie & Brown, said: “Construction projects don’t stop every time markets become volatile. Investment decisions still need to be made, contracts still need to be signed, and programmes still need to move forward.
“Events like this are becoming a more regular feature of the operating environment. Whether it is geopolitics, inflation, trade policy or supply chain disruption, market conditions frequently change quickly and often with little warning.
“The organisations best placed to succeed are not those trying to predict every disruption. They are the ones taking the time to understand the risks and build flexibility into their plans and delivery models from the outset.”
The US-Iran agreement may have reduced immediate pressure on energy markets, but it is unlikely to be the last unexpected event to affect construction this year, or next. Market shocks rarely arrive with warning. The challenge for construction leaders is not preparing for a specific event. It is creating projects, programmes and strategies with real flexibility that can respond to change without losing momentum.