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Rachel Reeves has announced plans to introduce financial support for households struggling with rising heating oil prices, as global energy markets react to the ongoing conflict involving the United States, Israel, and Iran.
In an interview with The Times, the UK chancellor said the government has identified funds to assist families facing steep heating bills. She added that the Treasury is currently exploring several options aimed at protecting the most vulnerable households from escalating energy costs.
The surge in global oil prices has sharply increased the cost of heating oil, which is widely used in rural communities that are not connected to the main gas network. Unlike gas and electricity, heating oil prices are not regulated by Ofgem and therefore are not covered by the energy price cap. Officials are expected to announce the new support measures early next week.
A government spokesperson stated that Reeves is prepared to take necessary action to ease the financial pressure on families while also ensuring the country’s public finances remain stable.
Around 1.7 million households in England and Wales depend on kerosene to heat their homes and supply hot water. Because these fuels are not price-capped, their costs can fluctuate dramatically depending on global market conditions.
Since the start of the military operations involving the United States and Israel in Iran, many households relying on heating oil have experienced major price increases. Some residents report their fuel costs have doubled, while others have faced cancelled deliveries or difficulty securing heating oil supplies.
Reeves said the government has been working closely with Members of Parliament and industry representatives to design a response for households that fall outside the protection of the energy price cap.
Looking ahead to gas and electricity bills, the chancellor noted that the government is reviewing multiple scenarios ahead of the next price cap adjustment in July. She suggested that targeted support measures could be introduced if energy costs rise further.
Earlier, Ofgem confirmed that household energy bills are expected to fall by around 7% in April following government changes to certain charges. However, prices remain roughly one-third higher than levels seen before the outbreak of the war in Ukraine, and many households are still dealing with significant energy debt.
As tensions continue in the Middle East, analysts warn that gas and electricity prices could rise again after July if wholesale energy costs continue to increase.
Reeves’s comments came after ministers held talks with petrol retailers on Friday amid concerns about rising fuel prices. The Petrol Retailers Association rejected claims that retailers were unfairly inflating prices and briefly threatened to withdraw from the meeting.
Before the discussions, Energy Secretary Ed Miliband said the government was concerned about market behavior and pointed to earlier warnings from the Competition and Markets Authority regarding fuel pricing.
Miliband confirmed that both he and Reeves had recently met with the competition watchdog to discuss issues surrounding heating oil and motor fuel markets.
Meanwhile, the future of fuel duty is also under consideration. The tax, currently frozen, is scheduled to rise in September, but ministers are reviewing whether that increase should proceed.
Opposition leader Kemi Badenoch has urged the government to cancel the planned fuel duty rise and called for the UK to expand oil drilling in the North Sea to improve domestic energy security.
