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Government support for the cost of heating oil

Heating oil is an alternative fuel that is used to heat homes and buildings that aren’t connected to the gas grid. It is produced from crude oil.

Where in the UK do people use heating oil?

The number and proportion of homes which use heating oil varies throughout the UK, with greater concentrations in rural areas. Based on data from the 2021 and 2022 censuses:

• In Northern Ireland, 49.5% of households used heating oil as their sole source of heating. This increases to 62.5% when considering households that used heating oil for some of their heating (that is, in combination with another source).
• In England and Wales, 3.5% of households used heating oil as their sole source of heating.
• In Scotland, 5.1% of households used heating oil as their sole source of heating.

Are heating oil markets regulated?

Heating oil prices aren’t regulated by Ofgem and aren’t covered by the energy price cap. This is because the energy price cap was implemented following the Competition and Markets Authority (CMA) Energy market investigation between 2014 and 2016, which found that there was weak competition between suppliers of electricity and gas through the grid. In comparison, the Office of Fair Trading investigation into Off-Grid Energy (PDF) in 2011 found that the heating oil market was generally working well with suppliers actively competing on price.

The UK Government has said that introducing a price cap on heating oil risks negative unintended consequences and could drive suppliers out of the market if wholesale prices rose above the cap. The previous government set out a similar position.

Following the CMA’s 2026 Heating Oil market study (see below), the UK Government has said that it will introduce a “proportionate regulatory regime” for the heating oil market in Great Britain. The Northern Ireland Executive said it will amend the existing consumer protections rather than introduce a new regulatory regime.

What affects the cost of heating oil?

As a fossil fuel product, the cost of heating oil in the UK is influenced by international fossil fuel markets. The price of heating oil has increased during March 2026 due to the impact of the US/Israel-Iran conflict on international fossil fuel markets. The conflict has disrupted the transit of crude oil through the Strait of Hormuz, a key shipping route which accounts for 25% of the world’s seaborne oil shipments, which has caused fossil fuel prices to increase globally.

Between the end of February and mid-March 2026:

• Data published by BoilerJuice, a heating oil supplier, indicated that the average price of home heating oil in the UK increased by over 100%, from approximately 60 pence per litre (ppl) to over 120 ppl. Heating oil prices fell to just under 70 ppl in July 2026, but they have since increased again. While they remain below their peak in March 2026, heating oil prices increased above 100 ppl in September 2026 and remain at around 110 ppl at the time of writing.
• Data published by Northern Ireland’s Consumer Council indicated that the average price of home heating oil in Northern Ireland increased by approximately 85 to 95%. These data also show a decrease in price between April and July 2026, followed by price increases since July.

Government support for households using heating oil

Funding to support households with heating oil costs

On 16 March 2026, the UK Government announced £53 million in funding to support low-income households who rely on heating oil to heat their homes. This funding has been divided between the four regions of the UK:

• £27 million has been allocated to England.
• £17 million has been allocated to Northern Ireland. The Northern Ireland Executive has also announced an additional £19 million in funding.
• £4.6 million has been allocated to Scotland. The Scottish Government has also announced an additional £5.4 million in funding.
• £3.8 million has been allocated to Wales.

Competition and Markets Authority investigations

The CMA has conducted:

• a review into breaches of consumer law in the heating oil market, and
• a Heating Oil market study.

Its review of breaches of consumer law led to compensation for heating oil customers who had orders cancelled and who subsequently had to reorder at higher prices.

Its Heating Oil market study found that increases in the cost of heating oil following the US/Israel-Iran conflict largely reflected increases in wholesale prices, but fuel distributors’ margins also increased.

The CMA’s Heating Oil market study final report (PDF) made a number of recommendations, including that the UK Government and Northern Ireland Executive should implement a “proportionate regulatory regime” for heating oil. However, it recommended that this regime should not regulate the price of heating oil as the potential benefits are small and could lead to worse outcomes for consumers.

Other actions

In addition to providing funding to support households with increased heating oil costs and the CMA’s investigations, the UK Government has:

• increased the amount of grant funding available through the Boiler Upgrade Scheme for households reliant on heating oil, which now provides £9,000 (up from £7,500) towards the cost of installing heat pumps for households not connected to the gas grid
• written to the UK and Ireland Fuel Distribution Association to set out its expectations of the sector and
• announced that it will suspend tariffs on kerosene, reducing costs for households using kerosene as heating oil.