The conflict in the Middle East: impact on construction, tourism and real estate

The conflict in the Middle East, rising inflation in key economies, and the transition at the US Federal Reserve create an uncertain scenario for these three strategic sectors

SANTO DOMINGO. – The Sub-Directorate of International Economic Affairs of the International Department of the Central Bank of the Dominican Republic published a document analyzing the impact on the global economy of the global crisis caused by the conflict in the Middle East.

The research "Analysis of the International Context, April 2026 (From April 13 to May 12, 2026)" was carried out by Eduardo Saviñón and Elizabeth Guzmán.

The Strait of Hormuz: common factor

The common thread running through three key sectors of the Dominican economy is the armed conflict in the Middle East and the resulting "disruption of energy and raw material flows through the Strait of Hormuz," cited in the report as the cause of the inflationary surge in Europe and Asia.

This disruption raises global supply chain costs, affects fuel prices that support air travel for tourism, makes construction inputs more expensive, and maintains tense financial conditions that weigh on the real estate market.

The IMF warned in its April World Economic Outlook (WEO) that "risks remain tilted to the downside," and that a prolonged conflict in the Middle East "could significantly slow economic growth and generate instability in financial markets," compounded by greater geopolitical fragmentation, a readjustment of productivity expectations associated with artificial intelligence, or new trade tensions.

From crude oil to bricks

The document specifies that international oil prices registered significant increases during April 2026. According to data from the report of the International Department of the Central Bank of the Dominican Republic (BCRD), Brent crude closed the month at USD 114.01 per barrel, compared to USD 101.16 at the beginning of April, a variation of +12.7%.

WTI crude, meanwhile, rose from $100.12 to $105.07, accumulating a gain of 4.9%. Dubai crude also climbed 5.8%, to $100.42.

WTI (West Texas Intermediate) is a type of light crude oil extracted mainly in Texas, United States and one of the three main benchmarks for oil prices worldwide, along with Brent (from the North Sea) and Dubai Crude (from the Persian Gulf).

"International prices for Brent and WTI crude oil registered increases of 12.7% and 4.9%, respectively, as a result of the escalation of the conflict between the United States, Israel and Iran, which generated a disruption in the global supply of oil," analysts say. 

The rising price of oil has a direct effect on the construction chain: it increases the costs of transporting materials, the use of machinery and equipment, and inputs derived from crude oil such as asphalt, plastics and certain waterproofing agents.

Added to this is the behavior of industrial metals, since, according to the report, nickel prices rose 13.2% and copper prices increased 4.5% in the period, "due to cuts in the production of these metals in Indonesia and Chile.".

Both are essential materials in electrical installations, piping, and metal structures in construction projects.

Inflation in major commodity markets was partly attributed to the "disruption of energy and commodity flows across the Strait of Hormuz," the report said, describing the impact on Asian prices.

In Europe, fuel costs increased 10.9% year-on-year during April, impacting the cost of transporting supplies to importing markets.

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