UK secures up to £350 for heating oil customers hit by price surge

The UK’s Competition and Markets Authority (CMA) has secured up to £350 in compensation for households whose heating oil orders were cancelled during a severe price spike triggered by the war in the Middle East. Around 1,700 consumers had their existing contracts scrapped by suppliers who then offered new deliveries at significantly higher rates.

The crisis peaked in April when heating oil prices surged 92% to 123p a litre. While a CMA market study concluded that the price increases largely reflected rising wholesale costs and that suppliers did not materially profit, the fallout revealed a structural flaw in how off-grid energy is managed. Unlike consumers connected to the mains gas or electricity networks, those relying on delivered fuel lack basic contractual protections during geopolitical shocks.

The compensation framework requires suppliers to pay the difference to customers who were forced to buy replacement oil at inflated prices. Households that simply went without fuel when their orders were cancelled will have their original deliveries honoured at the initially agreed price.

Not all companies have cooperated. The regulator is currently in negotiations with holdout suppliers and has warned it is prepared to launch court-based enforcement actions against those that refuse to compensate customers voluntarily.

Sarah Cardell, the CMA’s chief executive, noted that 1,700 customers had been “left in limbo” after their orders were cancelled. “While it’s encouraging that some suppliers have agreed to compensate customers, a number of firms still have not,” she said. “We’ll be pressing them to do so and are preparing to take enforcement action if they don’t.”

The issue affects roughly 1.5m UK properties, mostly rural homes disconnected from the mains gas grid. These households buy heating oil, also known as kerosene, in large bulk volumes, routinely facing upfront bills of £500 or more. This purchasing structure leaves them highly exposed to sudden international price movements compared to consumers on standard utility tariffs.

To address this regulatory imbalance, the CMA has advised the UK and devolved governments to establish a formal oversight regime for the heating oil sector. Cardell stated that “stronger safeguards” were needed. The proposed framework includes creating a register of suppliers, enforcing minimum standards for how order cancellations are handled, and giving consumers access to an independent dispute resolution service.

The government has signalled its readiness to act. Chancellor Rachel Reeves said: “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.”