In response to a dramatic surge in heating oil prices, Prime Minister Sir Keir Starmer has announced a new £53 million support package for households reliant on this fuel. The move comes as the cost per litre has doubled in recent weeks, exacerbated by shipping disruptions in the Strait of Hormuz linked to the Middle East war.
Heating Oil Crisis and Government Intervention
Heating oil, unlike other energy sources, is not covered by the UK's energy price cap. This has left approximately 1.5 million households vulnerable to market fluctuations. Following Brent crude oil prices exceeding $100 per barrel, many consumers have faced cancelled orders and forced reorders at significantly higher rates.
During a press conference at Downing Street, Sir Keir Starmer emphasized the government's commitment to assisting those most affected. He stated, "Whatever challenges lie ahead, this Government will always support working people. That is my first instinct – my first priority – to help you with the cost of living through this crisis."
Broader Energy Bill Impacts and Regulatory Measures
Alongside the heating oil support, the Prime Minister issued a legal directive to energy companies, ensuring that all savings announced in the recent Budget are passed directly to customers. This is part of a broader effort to mitigate rising energy costs, with the Ofgem price cap set to reduce average household bills by £117 annually from April.
However, analysts warn that the conflict in the Middle East could further inflate gas and electricity prices. Cornwall Insight forecasts that the Ofgem price cap for July to September might rise to £1,801 per year, an increase of £160 from the April figure, depending on the duration of the conflict.
Fuel Price Trends and Industry Warnings
The ripple effects of the Middle East tensions are evident in UK fuel prices. According to the RAC, the average price of diesel has climbed from 142.4p per litre to 160.3p per litre since late February, while petrol prices have increased by 7% over the same period, reaching 141.5p per litre—the highest since August 2024.
Chancellor Rachel Reeves and Energy Secretary Ed Miliband have engaged with oil industry leaders, cautioning against profiteering. Reeves confirmed that Treasury officials have secured funding to aid those dependent on heating oil, underscoring the government's proactive stance in addressing the cost of living crisis.
