The Competition and Markets Authority (CMA) has urged UK and devolved governments to introduce a new regulatory regime for the heating oil sector, citing insufficient consumer protections for the 1.5 million households reliant on the fuel. The call follows a market study initiated after price surges caused by geopolitical events, which saw average retail prices peak 92% higher in April 2026 compared to February of the same year.
Heating oil, primarily kerosene, is essential for a significant proportion of UK homes, particularly those in rural and off-grid communities who are not connected to mains gas or electricity networks. These households typically purchase heating oil in large volumes, often facing bills of around £500 or more at a time.
The CMA launched its market study after conflict in the Middle East led to considerable disruption in the sector. Data from the period showed average prices for heating oil increased by 64% from 64 pence per litre (ppl) to 104ppl between February and March 2026. Prices peaked at 123ppl in April 2026, marking a 92% increase from February levels. Consumers, on average, paid approximately £200 more for a typical 500-litre order in March 2026 than in February, with about £170 of that increase attributed to rising wholesale costs.
While the CMA's findings indicate that the home heating oil market is generally competitive and suppliers have not materially profited from the crisis, the authority identified clear gaps in consumer protections. Unlike those connected to gas and electricity networks, heating oil customers lack consistent standards of support for vulnerable individuals and access to alternative dispute resolution mechanisms when issues with suppliers arise.
This absence of safeguards becomes particularly problematic during periods of volatility, such as increased demand due to severe weather or supply disruptions caused by geopolitical developments. At such times, heating oil households may face substantially higher prices, uncertainty regarding delivery schedules, and limited options for urgent supplies. The CMA warns that such scenarios may become more common in the future.
To address these issues and improve outcomes, especially during periods of market instability, the CMA has put forward several recommendations to the UK and devolved governments. These include the introduction of a new, proportionate regulatory regime for heating oil suppliers. This regime should:
- Require suppliers to register and adhere to minimum standards, encompassing how prices are quoted, how cancellations are managed, and ensuring households have access to independent dispute resolution.
- Mandate suppliers to clearly signpost available payment plans and minimum purchase volumes.
- Establish a register for vulnerable households to facilitate better protection and support.
The CMA also recommends a review of rules and regulations surrounding minimum order volumes, with the aim of enabling people to purchase smaller amounts of heating oil. Furthermore, governments are encouraged to consider developing a new price checker tool for consumers in Scotland, modelled on the existing heating oil price tool implemented by the Consumer Council for Northern Ireland. Consideration should also be given to prioritising communities most exposed to higher heating oil prices for transition to alternative energy sources.
Alongside its market study, the CMA has been investigating concerns that some heating oil suppliers may have breached their contracts by cancelling customer orders. Analysis revealed that approximately 1,700 customers were affected by potential breaches. Although these individuals received refunds for their original orders, many were compelled to re-order at significantly higher prices or faced going without fuel. This could have resulted in some customers paying between £150 and £350 more for their heating oil, underscoring the need for improved regulatory protections like alternative dispute resolution to help consumers enforce their rights.
The CMA has expressed disappointment that not all affected suppliers have agreed to compensate customers voluntarily. The authority confirmed it is continuing to engage with these suppliers and is preparing to take court-based enforcement action against firms that fail to offer compensation.
Sarah Cardell, Chief Executive of the CMA, commented on the findings, stating: "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."
Ms Cardell further emphasised: "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."
Regarding the compensation issue, she added: "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 a related action, the CMA has also written to suppliers of liquified petroleum gas (LPG) to remind them of their obligations under consumer protection law. LPG, like heating oil, is a domestic fuel used for cooking and heating by off-grid households. At this stage, no finding of infringement against LPG suppliers has been made.
The CMA is now set to collaborate with governments, regulators, and industry stakeholders to consider and implement its recommendations. Discussions with suppliers regarding the proposed compensation scheme are also ongoing. An estimated 60% of UK orders for heating oil are placed online.
