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World Economy
Apr 06, 2026

UK Small Firms Brace for Heating Oil Bills to Double as Iran Conflict Drives Energy Prices to Record Levels

AI Summary
The war in Iran has pushed European fuel markets to historic highs, forcing thousands of UK small and medium‑sized enterprises—especially those in rural areas reliant on heating oil—to face more than a 100% increase in energy costs, while regulators and trade bodies warn of rogue brokers exploiting the crisis.

Thousands of independent UK businesses are preparing for heating‑oil expenses to more than double after the Iran war sent Europe’s fuel markets to fresh record highs.

Roughly 7% of all small and medium‑sized enterprises (SMEs) heat their premises with oil, and in many rural locations the figure climbs to about 17%, according to the Federation of Small Businesses (FSB), which represents around 200,000 firms and sole traders.

With many rural firms off the gas grid, they depend on heating oil—a kerosene derivative linked to jet‑fuel prices. Prices have surged dramatically: a supplier charged 54.9p per litre in January and demanded 129p per litre by late March, a rise of 116%. One hotel and restaurant owner in North Yorkshire, Anthony Jenkins, reported that his annual oil bill, normally around £3,000, is now unaffordable.

Jenkins said he has cut fuel usage by half and is asking guests to lower radiator settings rather than open windows. He also hopes to shift to solar‑heated water as daylight hours increase.

The FSB has urged the UK competition watchdog to extend its probe of the heating‑oil market to include SMEs, noting that the same shock has lifted North‑west European jet fuel to $1,900 per tonne and diesel to $1,600 per tonne, according to Argus.

Trade bodies warn that the volatility creates a fertile environment for rogue energy brokers who may push small firms into unfavorable long‑term contracts. Tina McKenzie, policy chair of the FSB, stressed the need for stricter broker regulations, noting that many SMEs lack the bargaining power of larger corporations.

Small businesses also miss out on the government’s household energy‑price cap and other consumer protections, despite their energy usage resembling that of households. McKenzie added that the market’s rapid evolution leaves many firms “nervous and vulnerable”.

Proposals to tighten broker oversight, including tighter scrutiny by Ofgem, are pending new legislation. An Ofgem spokesperson said the regulator has reminded suppliers and brokers to “treat customers fairly, prioritize transparent pricing and good consumer outcomes”, acknowledging the “concerning volatility” caused by the Middle‑East conflict.