UK households relying on heating oil are feeling the pinch of escalating costs due to ongoing tensions in the Middle East. Heating oil, used by approximately 1.5 million homes, is not protected by the Ofgem price cap that governs energy prices.
The End Fuel Poverty Coalition highlights a significant surge in heating oil prices, reaching levels reminiscent of the initial stages of the Ukraine conflict. Some consumers have reported a steep increase, with the cost of 1,000 liters of heating oil jumping from £670 in January to nearly £985.
Simon Francis, from the End Fuel Poverty Coalition, emphasizes the vulnerability of households using heating oil, as they face immediate cost spikes without the protection of the energy price cap. He stresses the need for urgent assistance for these households.
Renowned financial expert Martin Lewis has also cautioned those dependent on heating oil, pointing out the challenges faced by consumers in rural areas. The recent disruption in oil shipping through the Strait of Hormuz, coupled with attacks on vessels, has led to a rise in oil prices, with Brent Crude Oil hitting approximately $87 per barrel.
The energy market has witnessed a reduction in fixed-price tariff deals, indicating a dwindling availability of fixed deals. While there is anticipation of a decrease in energy prices starting April, with the announcement of a revised Ofgem price cap, experts foresee a potential 10% increase from July, driven mainly by higher gas prices.
Analysts at Cornwall Insight predict a significant rise in the Ofgem price cap for the July-September period, potentially reaching £1,801 annually. The final price cap adjustment will be contingent on wholesale price trends over the coming months, impacted by the duration of the Middle East conflict.