The UK’s competition watchdog has announced that heating oil customers whose orders were cancelled and subsequently re-priced at higher rates during recent geopolitical unrest are set to receive compensation. Approximately 1,700 households were impacted, reportedly incurring additional costs of up to £350, according to the Competition and Markets Authority (CMA).
The situation arose following a significant surge in wholesale oil prices, triggered by the US-Israel military operation against Iran in February. This conflict led to disruptions in the Strait of Hormuz, a critical global oil shipping route.
Wholesale oil prices, which were around $70 a barrel at the start of February 2026, surged past $100 a barrel by mid-March 2026, peaking in April. Consequently, average retail heating oil prices in the UK experienced a dramatic increase, reaching “at their peak, 92% higher” than pre-conflict levels.
The CMA’s investigation into the heating oil market found that, while the majority of price increases were a reflection of rising wholesale costs and suppliers did not “profit materially from the crisis,” consumers in this sector lack the same protections afforded to those connected to the national energy grid. The watchdog identified that impacted households “re-order[ed] at significantly higher prices or [had to] go without fuel.”
While some suppliers have voluntarily agreed to compensate affected customers, the CMA is “preparing to take court-based enforcement action against firms that fail to compensate customers voluntarily.” The UK and Ireland Fuel Distribution Association (UKIFDA), which represents heating oil suppliers, acknowledged the issue, stating that “there were a small number of cases found which require redress.”
The CMA has put forward recommendations to the UK and devolved governments for a new regulatory framework. These proposals aim to introduce stronger safeguards, including clearer rules on how prices are quoted, how order cancellations are managed, and enhanced support for vulnerable consumers.
Chancellor Rachel Reeves expressed concern over the vulnerabilities in the market, stating: “It is reassuring to know it is a competitive market but the lack of protection for these households does concern me so we will look very seriously at what can be done.” Ken Cronin, Chief Executive of UKIFDA, affirmed the association’s commitment, saying: “We will work with all government bodies on the recommendations set out in this report.”
Around 1.5 million households across the UK rely on heating oil, primarily in rural areas not connected to the main gas network. In Northern Ireland, over 60% of households depend on it, while in Scotland, approximately 142,000 households utilise heating oil, with those in remote areas often facing fewer supplier choices and higher prices. Further details on the compensation scheme are expected once it is fully operational.
Sarah Cardell, Chief Executive of the CMA, said:
“Heating our homes and having reliable hot water are basic needs. While the home heating oil market is generally competitive, that is not enough to ensure good outcomes for all.”
“Stronger safeguards are needed – including regulatory oversight and better support for vulnerable consumers as well as communities living in areas of the UK that are particularly exposed to higher and more volatile prices. These practical changes will help ensure people receive fair treatment, clear information and appropriate support when disruptions occur.”
“We have also found that around 1,700 customers were left in limbo by some suppliers after orders were cancelled as the crisis was unfolding. While it’s encouraging that some suppliers have agreed to compensate customers, a number of firms still have not. We’ll be pressing them to do so and are preparing to take enforcement action if they don’t.”
In Case You Missed It:
Alongside its heating oil investigation, the CMA has separately written to suppliers of liquified petroleum gas (LPG) to remind them of their obligations under consumer protection law. LPG is a domestic fuel, like heating oil, and is used for cooking and heating by people who are not connected to the grid. At this stage, it should not be assumed that the suppliers have infringed consumer protection law, and no finding has been made.
Next steps
The CMA will now work with governments, regulators and industry to consider and take forward its recommendations. It will also continue discussions with suppliers on the proposed compensation scheme.
