CMA to investigate heating oil suppliers over ‘blatant profiteering’ from Iran war
The Competition and Markets Authority has launched an inquiry into heating oil suppliers after consumers reported steep price rises and order cancellations amid rising wholesale costs linked to the Iran war. The investigation will assess whether suppliers breached consumer protection laws and could…
The Competition and Markets Authority (CMA) has announced a formal investigation into heating oil suppliers following a surge of consumer complaints about sudden price hikes and order cancellations. The complaints come at a time when global oil markets have been volatile due to the conflict in Iran, which has driven kerosene prices – the main component of heating oil – to near‑record levels.
What Is Driving the Price Surge?
Heating oil, a form of kerosene used to heat homes, cook food and provide hot water, is not subject to Ofgem’s energy price cap. Its price is therefore tied directly to the cost of jet fuel, which is heavily influenced by Gulf suppliers. In the weeks following the escalation of hostilities in Iran, kerosene prices in the UK rose from an average of 44.2p per litre in late February to 87.4p per litre by early March, according to the UK Independent Fuel Distribution Association (UKIFDA). This near‑doubling of the wholesale price has translated into higher retail prices for consumers.
About 1.7 million UK households, the majority of which are located in rural areas that lack mains gas connections, rely on heating oil. In regions such as Northern Ireland, Wales and Scotland, two‑thirds of homes use heating oil, with up to 45% of homes in Aberdeenshire depending on it or liquefied petroleum gas (LPG). The impact of price increases is therefore widespread and deeply felt.
Consumer Complaints and Alleged Profiteering
The CMA’s inquiry was triggered by a wave of “concerning reports” from consumers who said suppliers had cancelled existing orders and then offered new quotes at significantly higher prices. Other complaints included automated delivery triggers that activated when a tank’s fuel level fell below a set threshold, resulting in unexpected price hikes. One resident from Norfolk, who wished to remain anonymous, recounted how her family’s 700‑litre order placed on 1 March was cancelled unless they paid more, describing the practice as “daylight robbery.”
Conservative MP Harriet Cross, representing the Scottish seat of Gordon and Buchan, has been vocal about the issue. She highlighted that 45% of homes in her constituency are not connected to the mains gas network and are therefore vulnerable to price volatility. Cross has called for a mandatory price transparency scheme to help consumers compare suppliers and has urged the CMA to investigate what she terms “evidence of longstanding consumer harm.” She has written to the CMA demanding a review of the sector’s practices and has suggested that the current market structure may be allowing suppliers to exploit consumers.
Government Response and Potential Regulation
The Treasury has taken notice. Chancellor Rachel Reeves told the Treasury committee that she was “looking at some of those market practices” and has previously signalled that government assistance might be necessary for households reliant on heating oil. On Wednesday, the financial secretary to the Treasury, Lord Livermore, and energy minister Michael Shanks met with MPs to discuss the rising cost of heating oil. Reeves has written to the CMA, urging it to be vigilant and to recommend further regulation if necessary.
The CMA’s chief executive, Sarah Cardell, stated that while many retailers are behaving responsibly, the authority will write to suppliers and intermediaries to gather information about their pricing strategies. If the CMA identifies potential breaches of consumer protection law, it may take enforcement action. Cardell emphasized that price increases should reflect genuine cost pressures rather than opportunistic profiteering.
What Happens Next?
As the CMA begins its inquiry, it will collect data from suppliers, intermediaries and consumers to determine whether the alleged price hikes constitute unlawful behaviour. The investigation will assess whether suppliers have acted in a way that breaches consumer protection regulations and whether the market structure allows for unfair pricing practices. Depending on the findings, the CMA could impose penalties, require price adjustments or recommend new regulatory measures to protect consumers.
Consumers are advised to keep records of all communications with suppliers, including order confirmations and price quotes, and to report any suspicious activity to the CMA. The outcome of the investigation will be closely watched by households across the UK, especially those in rural areas who rely heavily on heating oil for their daily needs.
Why it matters
Rising heating oil costs threaten the affordability and safety of millions of UK households, particularly in rural areas that lack alternative heating options. The CMA’s investigation could safeguard consumers from unfair pricing and restore trust in the sector.
Key points
- CMA launches probe into heating oil suppliers after consumer complaints of price hikes and order cancellations
- Kerosene prices nearly doubled in March due to Iran conflict, driving retail costs up
- Rural households, especially in Northern Ireland, Wales and Scotland, are most affected
- MP Harriet Cross calls for price transparency and regulation
- Government officials are monitoring the situation and may intervene if necessary
Frequently asked questions
What is heating oil and why is it not capped by Ofgem?
Heating oil is a type of kerosene used for home heating, cooking and hot water. Unlike gas and electricity, its price is linked to jet fuel costs and is not regulated by Ofgem’s energy price cap.
How can consumers protect themselves from price gouging?
Keep records of all orders and quotes, compare prices from multiple suppliers, and report any suspicious activity to the CMA.
Will the CMA’s investigation lead to immediate price changes?
The CMA will investigate and may recommend enforcement action, but any price changes would depend on the findings and potential regulatory adjustments.
