UK households relying on heating oil are feeling the pinch of increased costs due to tensions in the Middle East. Approximately 1.5 million households use home heating oil, which falls outside the protection of the Ofgem price cap that regulates energy costs.
According to the End Fuel Poverty Coalition, the price of heating oil has surged to levels reminiscent of the early stages of the Ukraine conflict. Reports indicate that the cost of 1,000 liters of heating oil has escalated from £670 in January to nearly £985.
Simon Francis, coordinator of the End Fuel Poverty Coalition, highlighted the challenges faced by households using heating oil, stating that the lack of affordability for energy-efficient home improvements exacerbates their vulnerability to price hikes during international conflicts.
Financial expert Martin Lewis issued a cautionary message for heating oil consumers, emphasizing the unregulated nature of the market. Recent disruptions in oil shipping through the Strait of Hormuz, following attacks on vessels, have contributed to a rise in oil prices, with Brent Crude Oil reaching approximately $87 per barrel.
In response to the escalating costs, energy suppliers are withdrawing fixed-price tariff deals, reducing the availability of such offers significantly. While the new Ofgem price cap, effective from April 1, is expected to lower annual energy bills for the average dual fuel household, experts predict a subsequent increase of around 10% from July, primarily due to rising gas prices.
Analysts at Cornwall Insight anticipate a substantial rise in Ofgem’s price cap for the period from July to September, projecting an increase to £1,801 annually. The final cap will be determined based on wholesale prices over a three-month period, contingent upon the duration of the ongoing Middle East conflict.