Heating oil customers to receive compensation after canceled orders and price increases

Oil customers whose orders were canceled and prices hiked as the US-Israeli war with Iran escalated will receive compensation, the competition watchdog said.

Around 1,700 households have been forced to “re-order at higher prices or go without fuel”, costing them up to £350, the Competition Markets Authority (CMA) said.

Some suppliers have agreed to compensate customers, and the regulator has yet to take legal action against those who refuse, he added.

The UK and Ireland Fuel Distributors Association (UKIFDA), which represents oil suppliers, said “a few issues have been identified that require rectification”.

The conflict is disrupting transport and energy production in the region, with crude oil prices rising from around $70 a barrel at the start of the Iran war in February to nearly $120 a barrel by the end of March.

UK heating oil prices also jumped around this time. The CMA said on Wednesday that “average retail prices were a significant 92% higher”.

The CMA’s investigation into the heating oil market found that prices rose after the Iran war showed wholesale price increases and suppliers were not materially benefiting from the crisis.

However, heating oil customers are not as protected as those connected to the power grid, he said.

It suggested new rules on how prices are raised and how cancellations are handled, as well as “better support for vulnerable consumers”.

Chancellor Rachel Reeves said: “It is encouraging to know that it is a competitive market but I am concerned about the lack of protection for these families so we will be looking seriously at what can be done.

UKIFDA chief executive Ken Cronin said: “We will work with all government bodies on the recommendations set out in this report.”

Meanwhile, the CMA did not say how many suppliers have agreed to compensate customers for canceled orders, how many customers will receive payment and how much they will earn.

“Those who paid extra to replace the canceled order will be charged the difference, while those who did not purchase replacement oil will have their original order honored at the agreed price,” he said.

“(We’re) preparing to take court-based enforcement action against firms that fail to compensate customers voluntarily,” he added.

The BBC understands that more details will be provided once the program is up and running.

The CMA’s report into the heating oil sector follows a four-month investigation that began in March.

People who use fuel oil often store it in off-property storage and are among the first to feel the rise in prices.

About 1.5 million households rely on oil for heating but do not have the same level of protection as electricity and gas customers, the CMA said.

Most of these are in Northern Ireland, where the regulator says 60% of households rely on it.