Bill payers and business owners across the UK are grappling with rising costs as the outbreak of conflict in the Middle East continues to cause heating oil prices to spiral.
Home heating oil is used by around 1.5 million households in the UK, but sudden volatility in global oil trade has caused prices to spike by as much as £100 in the past week alone.
Nearly two-thirds of homes (62.5 per cent) of homes in Northern Ireland use oil for heating, compared to the UK average of just over five per cent.
Andy Douglas set up Andy’s Oil in 2013, providing heating oil to his customers in County Armagh for over a decade. He says that rising prices and panic buying have forced him to stop taking orders for a short time, as he has been forced to operate at a loss.
Mr Douglas told The Independent: “I’m working 16 hours today and I’m losing £1000 because of not charging enough a day or two ago when I accepted the order.”
The oil seller, who has worked in the trade since 2003, says he added on his normal margin, which varies from around 3p to 12p a litre.
“[But] my suppliers have increased their prices to me by 30p a litre”, he says, “so I’m delivering it well under what I would have”.
Just before the conflict, the average price of 500 litres of home heating oil in Northern Ireland was £307.38, figures from the Consumer Council NI (CCNI) show.
By Monday, this had spiked to £395 at one provider in County Armagh, and £425 at another in County Down.
Mr Douglas said: “I normally just lift my oil on a daily basis at Belfast storage terminals. I’ll go fill the lorry, go out and sell the oil, and that’s it. So I’m subject to the daily prices coming out of the storage terminal, whatever they may be.”
“That works fine most of time, except times when there’s panic buying like this.”
The business owner adds that he has “been through this before” at the outset of Russia’s war with Ukraine in 2022, which caused UK energy prices to spike before returning to levels consistently higher than before.
With that experience in recent memory “everyone knew to pounce and try and get the oil before it jumped in price”, says Mr Douglas, adding that he received around 200 or 300 phone calls on the Monday.
Unlike homes on grid-supplied electricity and gas on standard variable or default tariffs, prices for those that use heating oil are not regulated by Ofgem’s energy price cap.
This means they are entirely subject to the fluctuating price of heating oil, which looks set to increase further as the conflict in the Middle East intensifies.
Global oil prices continue to rise after the US and Israel carried out strikes on Iran on Saturday, which were followed by retaliatory Iranian strikes on targets in the United Arab Emirates (UAE), Qatar, Bahrain, Jordan and Iraq.
As fighting escalates, Iran has warned that it will “set fire” to any ships trying to pass through the Strait of Hormuz, a crucial shipping channel for the global oil industry.
The strait provides the only passage from the Persian Gulf to the open ocean, making it a crucial point for the operation of the oil industry. Around 20 per cent of the world’s gas and oil is shipped through the waterway.
Some have accused oil importers of increasing their costs prematurely, expecting more of a lag between the outbreak of the conflict and price rises.
Irish Labour Party spokesperson George Lawlor TD has called on the Government to immediately introduce a maximum price order on home heating oil.
He said: “What we are witnessing is pure price gouging. Home heating oil companies have hiked their prices overnight, blaming events in the Middle East, yet the oil currently being delivered to Irish homes has been in the country for weeks if not months.
“There has been no sudden disruption to supply. There is no shortage. There is no justification for hammering families in this way.”
Raymond Gormley, head of energy policy at the Consumer Council said: “As we import all our home heating oil, Northern Ireland is at the mercy of volatile global oil markets and the price that consumers pay is impacted by a complex range of factors, including geopolitical tensions which can result in price fluctuations.
“Home heating oil prices had been increasing slowly over the last couple of weeks, with 500 litres £307.38 on the 26th February, up £13 on the previous week.
“This conflict with Iran is very likely to have some impact on home heating oil prices in Northern Ireland and when we publish our weekly oil price check on Thursday, we will know exactly how much of an impact this will be. We will continue to monitor the situation very carefully.”
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