The cut will see a litre of petrol reduce by 20 cent while a litre of diesel will cost 15 cent less. Green diesel will be cut by two cent per litre.
The reduction will take effect from midnight tonight and remain in place until August 31st. It's expected to cost €320 million.
Fuels for Ireland, the body that represents Ireland's fuel sector, fears the reduction may not be enough to combat soaring wholesale prices.
The body pointed out that diesel costs rose by 22 cents per litre in the last 24 hours. It also raised the question of whether a rebate would be in place for those retailers and suppliers who have already purchased fuel at the higher price and may have to sell it at a loss.
"There will need to be some form of rebate mechanism here in order for the reductions to be passed on immediately," FFI CEO Kevin McPartlan said.
McPartlan said the government must urge its European partners to agree on changes to EU-wide changes on VAT for fuel.
"We need to impress on them the urgency of this situation and the need to bring about price certainty as soon as possible," he said.
Taoiseach Micheál Martin acknowledged the effect the ongoing conflict in Ukraine was having on rising fuel prices.
"Government is acutely aware of this issue," he said. "We don’t argue that the impacts of people are not sustainable at the rate that these increases are occurring."
