Why Oil Prices Hit $100 Again—And What It Means for Your Bills

Oil prices are back above $100 per barrel—and your heating bills are likely to follow. At 99.3p per litre, UK heating oil is already reflecting the upward pressure, and geopolitical tensions combined with tight supply continue to push global crude higher.

Why Are Prices Rising?

Unlike mains gas and electricity, which are regulated by Ofgem's price cap, heating oil prices move freely with global markets. This means homeowners on oil heating face direct exposure to international crude dynamics. The recent breach of $100/barrel signals that:

• Supply constraints persist in key producing regions

• Seasonal demand is tightening global inventories

• Currency fluctuations amplify costs for UK importers

• Refinery maintenance is reducing output

For context, mains gas customers benefit from the current Ofgem cap at 6.04p/kWh, while electricity sits at 24.5p/kWh. But these protections don't extend to oil heating—leaving around 1.5 million UK households vulnerable to price swings.

The Broader Energy Picture

While oil prices dominate headlines, the wider energy market remains fragmented. Wood pellets, at 7.2p/kWh, continue to offer the lowest cost per unit of heating energy, though supply chain reliability and storage requirements vary. The challenge for policy makers is that fuel poverty increasingly depends on which heating source you use, not just overall energy costs.

Regulatory intervention has helped cap exposure for gas and electricity customers, but oil and alternative fuels remain unprotected—creating a two-tier system where vulnerability is determined by your heating choice rather than income.

What You Can Do Now

If you use heating oil:

• Compare current oil prices and lock in rates while markets remain volatile
• Consider bulk purchasing if you have storage capacity—larger orders often attract better rates
• Ask your supplier about price protection schemes

If you're on mains gas or electricity, you're shielded by the Ofgem cap until the next review period, but it's still worth checking gas and electricity deals to ensure you're on the best available tariff.

Exploring alternatives? Wood pellets remain cost-competitive, though boiler compatibility and storage are practical considerations.

The Policy Gap

As crude climbs, the lack of price regulation for heating oil becomes increasingly problematic. Unlike European neighbours with emergency fuel support schemes, the UK offers limited protection. The government's focus on the Ofgem cap leaves oil-heated homes exposed to precisely the kind of volatility currently unfolding.

With $100 oil potentially here to stay, your best defence is actively shopping around—and considering whether your current heating fuel represents good value compared to available alternatives.