Dominican Republic faces $900 million oil bill and higher inflation from US‑Iran conflict

The Central Bank of the Dominican Republic (BCRD) warns that the war between the United States and Iran will add roughly $900 million to the country’s 2026 oil import bill, pushing the energy bill to about $5.4 billion. Inflation is expected to rise above the 5 % target range, with projections of 5.35 % year‑on‑year between April‑June and 5.56 % between July‑September, before easing to 4.88 % in the fourth quarter. The bank is keeping the monetary policy rate unchanged and has postponed the repayment of liquidity facilities to January 2027, citing the shock as “transient”.

Economists say the damage to the global oil market is irreversible. Nelson Suárez noted, “the crisis is twice as large as the one in the 1970s… a reduction of up to 400,000 barrels per day in reserves” and warned that oil prices will not return to the pre‑conflict $65 per barrel. The Dominican government had earmarked about RD $12 billion to cushion fuel price swings, but the conflict has driven that figure to an estimated RD $62‑72 billion, leaving the state with limited options: cut other budget items, increase the fiscal deficit, or pass the cost to consumers, potentially raising gasoline to RD $500 per gallon. Gold exports and strong remittance inflows provide some offset, but fiscal space remains constrained.