CMA Heating Oil Compensation: What UK Households Need to Know

The Competition and Markets Authority (CMA) has confirmed that heating oil customers whose orders were cancelled and prices raised during the US-Israel war with Iran will receive compensation. The announcement, made on 15 July 2026, marks the culmination of a market study launched after the conflict caused severe disruption to the heating oil sector.

Around 1,700 households were forced to "re-order at significantly higher prices or go without fuel," costing them up to £350 each, according to the CMA. Some suppliers have already agreed to compensate affected customers, and the regulator is pursuing legal action against those who have refused.

The UK and Ireland Fuel Distribution Association (UKIFDA), which represents heating oil suppliers, acknowledged the issue, stating "there were a small number of cases found which require redress." UKIFDA chief executive Ken Cronin added: "We will work with all government bodies on the recommendations set out in this report."

How the crisis unfolded

The conflict in the Middle East sent shockwaves through global energy markets. Wholesale oil prices jumped from around $70 a barrel at the start of the Iran war in February to almost $120 a barrel by the end of March, as the fighting disrupted transportation and production in the region.

UK retail heating oil prices surged in parallel. The CMA reported that "average retail prices were, at their peak, 92% higher." In Northern Ireland, where over 60% of households rely on heating oil, prices rose by a record monthly rate of 92% in March alone.

Despite the dramatic price spikes, the CMA's investigation found that the increases largely reflected rising wholesale costs and that suppliers have not profited materially from the crisis. The market remains generally competitive, the watchdog concluded.

A gap in consumer protections

The core finding of the CMA's study is that heating oil customers are not as well protected as those connected to the gas and electricity grids. Unlike mains energy, heating oil is typically bought in large volumes, meaning households can face bills of around £500 or more at a time. There is no equivalent of the energy price cap or the supplier of last resort mechanism for off-grid homes.

Chancellor Rachel Reeves commented: "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."

Sarah Cardell, Chief Executive of the CMA, said that while the home heating oil market is generally competitive, that is "not enough to ensure good outcomes for all." She added: "Stronger safeguards are needed – including regulatory oversight and better support for vulnerable consumers as well as communities living in areas of the UK that are particularly exposed to higher and more volatile prices."

What the CMA recommends

The CMA is not recommending price controls of the sort applied to gas and electricity. Instead, it has proposed a "new, proportionate regulatory regime" focused on consumer information and minimum standards. The key recommendations include:

• Supplier registration and minimum standards: Requiring all heating oil suppliers to register and meet baseline requirements covering how prices are quoted and how order cancellations are managed.
• Clear signposting of payment plans and minimum purchase volumes: Suppliers would be required to clearly display available payment options and any minimum order sizes, helping households make informed choices.
• A register for vulnerable households: Creating a central register to identify and protect vulnerable consumers, ensuring they receive appropriate support during supply disruptions or price shocks.

The CMA has recommended that the UK government and devolved administrations, including Stormont in Northern Ireland, implement these measures. Around 1.5 million households across the UK depend on heating oil, with Northern Ireland having the highest concentration — around two-thirds of households use home heating oil.

Regional disparities

The CMA's study also highlighted significant regional differences. Prices tend to be lowest in Northern Ireland, where households are closer together, reducing delivery costs. However, people in many remote areas — including parts of Scotland — generally have less choice of suppliers and face higher prices due to the higher costs of serving those areas.

These disparities underscore the need for tailored protections that account for local market conditions, rather than a one-size-fits-all approach.

What happens next

The CMA is now pursuing legal action against suppliers who have refused to compensate customers whose orders were cancelled during the conflict. The watchdog has not disclosed how many suppliers are involved in the compensation process or how many have resisted.

For the broader regulatory reforms, the ball is now in the government's court. The CMA's recommendations are not binding, but the Chancellor's public concern suggests political momentum for action. UKIFDA has indicated it will engage constructively with the process.

For the 1.5 million UK households that rely on heating oil, the immediate takeaway is that compensation is on its way for those affected by the crisis, and that longer-term protections are being seriously considered. The gap between the protections enjoyed by grid-connected households and those who heat their homes with oil has been laid bare — and the CMA has made clear that it expects that gap to be closed.