Iran War Fallout: Construction Industry Faces Pressure from Rising Bitumen Costs and Interest Rates

The German construction industry is facing significant headwinds, with rising energy prices linked to the Iran war directly impacting project costs. The Bauindustrieverband Ost, representing 260 companies and 20,000 employees in eastern Germany, highlights the particular pressure on road construction due to soaring bitumen prices. As a key component of asphalt, bitumen's cost is closely tied to oil prices, which have surpassed $100 per barrel, directly squeezing profit margins.

Beyond material costs, the industry is also grappling with the effects of rising interest rates. This is making financing for construction projects more expensive, leading to delays and cancellations, particularly in the residential sector. This situation further tightens an already strained housing market, posing a significant challenge to the industry's expected recovery in 2026.

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An oil price of over 100 US dollars per barrel directly impacts central building materials.

The uncertainty surrounding price developments makes it difficult for companies to accurately calculate project costs. This increased risk could lead to delays or even render public construction projects economically unviable. The Bauindustrieverband Ost's concerns underscore a broader economic vulnerability within Germany, where geopolitical events and monetary policy are creating a challenging environment for a vital sector.

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Higher construction interest rates mean that projects are being postponed or, in the medium term, are no longer being realized at all.