Danish toymaker Lego Group is preparing for higher energy and raw material costs as oil and gas prices climb amid conflict in the Middle East.

Chief executive Niels Christiansen told Reuters that rising oil prices could, over time, lift the cost of plastics and other inputs.

He said existing supply agreements should soften the effect, meaning any impact would be gradual.

Brent crude has jumped by as much as 65% since the US and Israel bombed Iran last month, moving above $100 a barrel.

The broader rise in energy prices has added to cost pressures for manufacturers, alongside continued supply-chain uncertainty linked to the expanding conflict involving Iran and weaker growth in some consumer markets.

Lego is also dealing with shifting US tariff policy after the Supreme Court struck down some key levies introduced by Donald Trump last month.

Trump later set a blanket 10% tariff that could increase to 15%.

According to the report, the company plans to open its first US factory in 2027 in Virginia.

In 2025, Lego reported growth across every region and product category, with sales increasing in the US, Europe and Asia-Pacific.

China returned to growth after two years of flat or declining performance.

Christiansen said the results were supported by higher volumes rather than price rises, and added the company has no near-term plan to increase prices as it targets a broader customer base.

Lego expects high single-digit revenue growth this year.

Alongside its core business, Lego has widened brand partnerships, including Formula One, Nike, and shows such as Bluey and Pokémon.

It is also introducing a new “SMART Brick” incorporating lights, scanners, speakers and sensors.