CMA orders heating oil compensation, flags regulation gap

The UK Competition and Markets Authority (CMA) has ordered heating oil suppliers to compensate around 1,700 households that had orders cancelled during the initial phase of the US-Israel conflict with Iran. Customers who were forced to re-order at higher prices will receive refunds covering the difference. The regulator is preparing court action against any firms that refuse to pay.

The intervention follows a four-month investigation into a market left reeling by a sharp geopolitical shock. Wholesale oil prices surged from roughly $70 a barrel in February to almost $120 by late March. The CMA noted that average UK retail heating oil prices peaked at 92% higher than pre-conflict levels.

For suppliers and investors, a critical finding in the CMA report is the absence of profiteering. The watchdog concluded that the retail price increases largely reflected rising wholesale costs rather than opportunistic margin expansion. The immediate financial liability therefore stems from operational failures—specifically, the cancellation of locked-in orders—rather than systemic overcharging.

Consumers who acted quickly to secure supply were penalised when suppliers dropped their orders, forcing them to pay up to £350 more for replacement fuel. Under the compensation scheme, those who bought replacement oil will be made whole on the price difference, while those who went without will have their original orders honoured at the initially agreed price.

The broader significance for the sector lies in the regulatory gaps exposed by the crisis. Approximately 1.5 million UK households rely on heating oil, including 60% of homes in Northern Ireland. Unlike electricity and gas customers, these off-grid consumers do not benefit from standard energy price protections.

The CMA has recommended new regulations governing how prices are quoted and how cancellations are managed. Chancellor Rachel Reeves said: "It is reassuring to know it is a competitive market but the lack of protection for these households does concern me so we will look very seriously at what can be done."

The industry appears ready to absorb the regulatory shift. Ken Cronin, chief executive of the UK and Ireland Fuel Distribution Association (UKIFDA), said: "We will work with all government bodies on the recommendations set out in this report." The UKIFDA characterised the cancellations as a small number of isolated cases requiring redress. For distributors, the immediate cost is limited to compensating the affected households, but the long-term impact will be stricter compliance requirements on order management during periods of extreme volatility.