Currie & Brown: The Impact of Oil Prices on Data Centres

Oil price volatility is still shaping the outlook for data centre construction, despite the US and Iran's recent Memorandum of Understanding amid conflict in the Middle East. 

According to research from cost management and advisory services firm Currie & Brown, fluctuations in energy markets are expected to feed through to the cost of key construction materials, creating further pressure on projects that already depend on complex global supply chains.

The research finds that steel prices could increase by up to 9.1% by September if oil prices remain high. Aluminium prices could rise by as much as 12.4%, while copper could increase by 5.5%.

Demand for aluminium and copper is already elevated because of continued investment in digital infrastructure. As a result, Currie & Brown predicts that data centre construction costs could increase by up to 6.8%.

Speed to market increases cost pressure

The report argues that data centres face an additional challenge beyond higher commodity prices.

Operators and developers are under constant pressure to bring new capacity online as quickly as possible to meet growing demand for digital infrastructure.

Planning decisions are often made months before construction begins in order to maintain speed to market. When oil price volatility affects manufacturing, processing and transport costs, those early procurement assumptions can quickly become outdated, placing pressure on project budgets.

The research suggests this combination of fixed delivery schedules and changing material costs leaves data centre developers with limited room to absorb unexpected increases.

Alan Manuel, Group CEO at Currie & Brown, says: "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.

“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."

Beyond construction, the report also notes that data centres remain exposed to higher operating costs because of their substantial ongoing energy requirements.

Rising energy prices therefore have the potential to affect both the cost of building new facilities and the cost of operating them once they enter service.

Regional differences shape procurement strategies

Currie & Brown's research also highlights that oil price volatility is unlikely to affect every market in the same way.

In India, steel prices could increase by as much as 18%, supported by strong domestic demand and reliance on imported materials.

Singapore, by comparison, could see steel prices rise by only 4.3%, partly because many major developments have already secured materials through early procurement strategies.

For international data centre developers expanding across multiple regions, these differences create another layer of complexity. A business delivering facilities in both India and Singapore could face very different material costs despite procuring similar products for comparable projects.

The report says local factors including currency exposure, dependence on imports and domestic demand all influence how global market movements translate into construction costs.

It also suggests that organisations making procurement decisions well in advance may be better protected from short-term price movements, while projects without early purchasing strategies remain more exposed to changing market conditions.

Flexibility becomes a competitive advantage

Although the agreement between the US and Iran eases some pressure on global energy markets, Currie & Brown says uncertainty remains over where oil prices will settle and how supply chains will respond.

The research recommends preparing for continued cost fluctuations throughout project delivery instead of waiting for markets to become more predictable.

With competition to deliver new facilities quickly, developers have limited opportunities to delay projects while waiting for material prices to fall.

The report argues that building flexibility into procurement strategies, project planning and delivery models can help operators respond more effectively when market conditions change.

While data centres are among the sectors most exposed to rising prices because of their dependence on steel, aluminium, copper and energy-intensive systems, the research suggests that early planning and adaptable procurement remain practical ways to reduce the impact of volatility on project budgets.