SANTO DOMINGO – The construction sector is under pressure that stems neither from housing demand nor from interest rates. After 38 weeks of stability between mid-2025 and early 2026, the hydrocarbon market entered a turbulent year, marked by the largest price increase since 2022 in March, a government price freeze in June, and a new surge in August fueled by the conflict between the United States and Iran.
This erratic behavior has a measurable impact on the sector's own official indicators. The Direct Cost Index for Housing Construction, published monthly by the National Statistics Office, has already registered fuel among the inputs with the largest one-off increase of the year, in a context where construction activity was also showing signs of slowing down for reasons unrelated to oil.
This analysis reviews the mechanism behind fuel volatility in 2026, what official construction sector indicators show, who within the industry feels that impact most strongly, and what scenarios should be monitored for the remainder of the year.
The mechanism behind volatility
Understanding why fuel prices fluctuate requires first examining how they are set. The Ministry of Industry, Commerce, and MSMEs (MICM) publishes the price table for the following week every Friday, based on an Import Parity model. The Dominican Republic refines only about 20% of its own consumption, meaning that most of the fuel arriving in the country is already processed from abroad, at a cost that depends not only on the price of crude oil but also on what is known in the industry as the crack spread—the margin between the price of raw oil and the price of refined fuel.
This nuance explains much of what happened in 2026. For most of the year, the price of oil remained relatively stable, around US$80 per barrel, a level that under normal circumstances shouldn't cause major shocks to local prices. However, refining costs rose sharply in US refineries, with increases exceeding 90% for premium gasoline in some months—a phenomenon linked to geopolitical tensions in the Middle East rather than to the availability of oil itself. For a country that imports most of its refined fuel, this increased cost of the industrial process is passed almost directly on to the bottom line of the industrial sectors.
The year of the roller coaster
The price trajectory in 2026 can be summarized in three distinct phases. The first was one of prolonged stability, with 38 consecutive weeks without variations in consumer prices, until March of this year when the government announced the largest increase since 2022, attributed to the extreme volatility of international oil markets amidst the Gulf War.
The second phase involved state intervention. In June, as part of what the government called the Anti-Crisis Plan, the Ministry of Industry, Commerce, and MSMEs (MICM) formally activated a price freeze mechanism for the most consumed fuels, supported by subsidies that exceeded RD$780 million in various weeks and, later, RD$900 million. The central condition of this mechanism was that the international price of oil not exceed US$95 per barrel, a threshold designed to give the State room to maneuver without indefinitely compromising public finances.
The third phase, still underway, is one of renewed upward pressure. In August, the escalation of the conflict between the United States and Iran once again increased international refining margins, and the government implemented consecutive weekly adjustments to gasoline and diesel prices, although it maintained protection for liquefied petroleum gas, the most widely used fuel in Dominican households, as part of its stated strategy to protect the most economically vulnerable sectors.
What official industry indicators say
The Direct Housing Construction Cost Index (ICDV), which the ONE calculates on a basket of direct inputs and services for residential construction in the National District and the province of Santo Domingo, offers a more detailed reading of how this energy volatility translates into the real cost of building.
- In April 2026, the ICDV rose 0.67% compared to March, and among the inputs that most pushed that rise were tools (9.94%), PVC pipes (7.14%) and fuels (5.38%), the latter above traditionally more visible items such as electrical wires (4.05%) or steels (3.46%).
- In that same month, electric generators registered a drop of 2.91%, a figure that illustrates that the impact of fuel on the sector is not linear or uniform among all its components, and that should be read with nuances instead of assuming an automatic correlation.
- The index closed July 2026 at 240.62 points, with an accumulated variation of 1.88% since December 2025 and a year-on-year increase of 2.08% compared to July 2025, a trajectory of moderate increases, not an uncontrolled climb.
- The year 2025 had closed with a cumulative increase of 3.72% in direct housing construction costs, with the ICDV averaging 236.17 points, 8.49 points above the level observed in 2024, according to ONE itself.
The broader context: a sector that was already slowing down
The pressure on fuel prices comes at a time when the construction sector was already showing signs of recovery even before the year's energy volatility began. The Central Bank reported that sector activity showed a year-on-year decrease of 2.3% in the first half of 2025, a performance it attributed mainly to international economic uncertainty and relatively high interest rates, factors that led to the postponement of private construction projects and lower demand for housing during that period.
This contrast between a construction sector seeking to stabilize and rising direct costs presents the industry with increasingly tight margins. A developer who a year ago could more easily absorb a monthly variation in the ICDV (Construction Cost Index) now operates with less room to maneuver if that same variation coincides with weeks of fuel price increases, especially in bank-financed projects where the cost of capital already represents additional pressure on project profitability.
Who feels the impact most strongly
Not all players in the sector experience fuel price volatility in the same way. Low-cost housing projects, which operate with narrower profit margins by definition, have less capacity to absorb unforeseen increases in material transportation or machinery operation costs without passing that cost on to the final unit price or jeopardizing the project's viability. Larger-scale developers, on the other hand, typically have more leeway to negotiate transportation contracts with adjustment clauses or to diversify their suppliers, allowing them to better manage the impact of each individual price increase.
Public works, financed with pre-established budgets, face a different challenge. Any sustained increase in fuel prices not included in the original budget for a state project can lead to delays, renegotiations, or, in the most extreme cases, the partial paralysis of projects—a risk that infrastructure planning authorities must monitor with the same attention as the private sector.
What mechanisms exist to cushion the blow
The Anti-Crisis Plan itself is, to date, the main tool the State has to contain the direct impact of international volatility on consumers and, by extension, on productive sectors such as construction. The mechanism has demonstrated the capacity to maintain stable prices for periods of several months, as occurred between June and much of July 2026, but its effectiveness is tied to an external factor beyond the government's control: the international price of oil.
For the private sector, the most realistic response is to incorporate fuel volatility as a variable in the financial planning of any project, with flexible contractual clauses, specific contingency margins, and constant monitoring of available official indicators, rather than treating it as an occasional unforeseen event.
At the time of this writing, the central condition of the Anti-Crisis Plan—that international crude oil prices not exceed US$95 per barrel—continues to determine the government's room for maneuver in maintaining stable prices. The conflict between the United States and Iran, which in August again put pressure on international refining margins, is currently the most relevant geopolitical variable for the Dominican fuel market, even more so than the behavior of crude oil in its natural state. The government has, in parallel, maintained the price freeze on liquefied petroleum gas for practically the entire year, as part of its stated strategy to protect low-income households, although this protection has not been extended with the same intensity to gasoline and diesel, which are most used by the construction sector.
What's next: scenarios to watch out for
Looking ahead to the remainder of 2026, at least three variables will determine whether the pressure on construction costs moderates or intensifies. The first is the evolution of the conflict between the United States and Iran, which has so far been the main trigger for the most recent price increases. The second is whether the international price of crude oil remains below the US$95 per barrel threshold that underpins the Anti-Crisis Plan, or whether this condition is breached, forcing the government to rethink its subsidy strategy. And the third is the performance of the ICDV (Construction Cost Index) itself in the upcoming monthly reports from the National Statistics Office (ONE), which will confirm whether the impact of fuel on direct construction costs was a one-off event in April or the beginning of a more sustained trend.
None of these three factors are under the direct control of the construction sector, which reinforces the idea that the best defense available, both for individual developers and for public infrastructure planning, is the ability to systematically monitor these indicators and adjust financial planning, rather than assuming that the stability of a given month will continue indefinitely.
Official sources consulted
- Ministry of Industry, Commerce and SMEs (MICM) — Weekly fuel price tables and announcements on the Anti-Crisis Plan — https://micm.gob.do
- National Statistics Office (ONE) — Direct Housing Construction Cost Index (ICDV), monthly bulletins — https://www.one.gob.do
- Central Bank of the Dominican Republic (BCRD) — Construction Sector Activity Data and Monthly Indicator of Economic Activity (IMAE) — https://www.bancentral.gov.do
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