Heating oil prices more than double after Iran war – what support can you get?
The price of heating oil, used by some in rural areas to warm their homes, has surged following conflict in the Middle East.
The price of heating oil has risen sharply following the US and Israel’s strikes on Iran, meaning many homeowners face the prospect of much higher heating bills.
An estimated 1.7 million UK households, typically in rural areas, use heating oil to warm their homes. The price has surged by more than 113% in recent weeks, leaping from around 60p per litre on 28 February to more than £1.28 per litre on 18 March.
Heating oil is manufactured by processing crude oil, meaning the price is tied to the price of oil – much in the same way that the price of petrol or diesel is.
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On Monday, the government confirmed it would step in and offer help to some households that are struggling to keep up with the increased prices, unveiling over £50 million in support.
"That's why we're putting over £50 million of support to help the people who need it most, including funding for the Northern Ireland Executive to deliver support in Northern Ireland where this issue hits hardest.”
Why are heating oil prices increasing?
When oil prices rise or fall, the price of heating oil soon follows suit.
At the end of February, the US and Israel’s strikes on Iran led to an escalation of conflict in the Middle East, where much of the world’s oil supply is sourced, resulting in large disruption to global oil supply lines.
War in the region makes transporting oil much riskier, as attacks from either side could target ships. Ships carrying oil are not passing through the Strait of Hormuz, through which around 20% of the world’s oil is transported, as the strait is just off the coast of Iran.
This has meant that the supply of crude oil has taken a huge hit and become much more constrained. However, demand for oil has remained the same, meaning that, due to the laws of supply and demand, prices for oil and its derivatives have increased sharply.
The impact of the war will not just be felt in the energy market. Experts have warned that hikes to energy prices may lead to increased inflation, which could lead the Bank of England to pause future interest rate cuts.
Will the government step in to help households?
Households are set to benefit from an over £50 million targeted support package to help with the soaring cost of heating oil, the government confirmed on 16 March.
The scheme is designed to help households who have had no choice but to top up their heating oil tanks during this time of heightened prices to maintain their heating and hot water.
The funds will be distributed through local authorities via the Crisis and Resilience Fund, starting from 1 April, with the scheme targeting areas with higher rates of heating oil usage.
The new scheme will replace the existing Household Support Fund, which will run until 31 March.
Households who are able to demonstrate hardship will be able to benefit from the extra funding by contacting their local authority.
The government also announced it will impose greater regulation on the heating oil market, which it says does not have the same consumer protections as the mains energy market.
Firms that supply energy to households through the mains are regulated by Ofgem, but there is no such protection for those reliant on heating oil.
Moving forward, the government says it intends to do more to protect households reliant on heating oil, including agreeing a stronger code of practice with the industry, and exploring the creation of a new ombudsman or regulator.
Ministers have also said the government will not allow price gouging, and asked the Competition and Markets Authority (CMA) to gather evidence on whether customers are being treated fairly in current market conditions.
If any evidence emerges that customers have been exploited, the government will take action. Prime minister Keir Starmer said: “I will not tolerate companies trying to exploit this crisis. If the companies have broken the law, there will be legal action.”
What other support is available if you can’t afford to buy heating oil?
Alongside the new measures, there are some other forms of support if you are struggling to afford to warm your home after the hike in heating oil prices.
If you can’t afford to buy fuel – or may not be able to in the near future – and can prove it, you may be able to get some help through Citizens Advice.
Support may be available through your local council, as some offer local grants or schemes for people who are reliant on heating oil – this is the initiative that the government’s new “Crisis and Resilience Fund” will replace.
As the new fund will only launch on 1 April, it may be worth checking to see if you are eligible for already-existing support through your local authority.
Meanwhile, the UK and Ireland Fuel Distributors Association (UKIFDA) says if your tank is running low, the best approach currently is to order your fuel as normal, but they add that if you are able to delay purchasing you may consider waiting to see if prices return to normal soon.
More broadly, it is good practice to shop around for your heating oil to make sure you are getting the best deal. Citizens Advice says you should try to get at least three quotes from different suppliers so you can find the best option.
It is also normally more expensive to get an urgent delivery of oil, so it is a good idea to plan your delivery well in advance. You may also get a better deal if you get one large delivery rather than multiple smaller deliveries.
If you are over 75, you should be getting priority deliveries if your supplier is a member of UKIFDA. If you don’t think this is the case, you should check with your supplier that you are on the “Cold Weather Priority Initiative”.
When will heating oil prices go down?
Disruption to the supply of oil, which heating oil is derived from, is the main driver to the price rises we are currently seeing.
That, paired with the fact there is no central regulator that determines prices of heating oil, means households using the fuel are particularly vulnerable to market forces.
To add more complexity, kerosene, which is the chemical most commonly used as heating oil in the UK, is also used as aeroplane fuel, meaning the aviation industry has strong price-setting power over the heating oil market.
Because the oil market is so volatile at the minute, and there is no price cap set in advance, it is difficult to predict where the price of heating oil will go in the future.
This being said, one way to get a rough idea of where the price of heating oil may go in the future is by looking at where the wider oil market will go.
Where prices go next will largely depend on how long the Iran war will go on for, and how safely oil can be transported through the Middle East, but most forecasts expect prices to remain higher than before the conflict for the remainder of 2026.
One key factor for this is that traffic through the Strait of Hormuz is expected to be heavily disrupted for some time, pushing oil prices up.
Economists at the bank ING on 16 March suggested this disruption will keep oil prices high for the rest of the year.
Their forecast is based on the assumption that intensive combat will end by the end of March but will be followed by lower intensity strikes that linger on for several months.
Because of this, they expect 100% disruption in the Strait until the end of March, then 50% in April, 25% in May, 10% in June, and negligible disruption thereafter.
Disruption of this scale would bring the average price of a barrel of oil to around $91 in the second quarter of 2026, $85 in Q3, and $77 in Q4.
If ING are correct, increases in the price of oil to this scale would be seen in the heating oil market, keeping prices higher than they were before the conflict until at least the end of the year.
Bear in mind that making accurate predictions about the price of oil is incredibly difficult at the moment due to the volatility of the situation, so take this forecast with a grain of salt.
