Hundreds of heating oil customers to be handed compensation over Iran war price hikes
Hundreds of people who were affected by suppliers cancelling heating oil orders when prices surged following the Iran war have been told they will receive compensation, the UK’s competition watchdog has said.
Around 800 people have been notified and hundreds more are set to be contacted, the Competition and Markets Authority (CMA) said.
The CMA said suppliers had joined its compensation scheme after it raised concerns about possible breaches of customer contracts.
Wholesale gas and oil prices spiked when the US-Israel’s war with Iran began at the end of February, leading average heating oil prices to soar by 92 per cent at their peak.
Some 1.5m households in the UK use heating oil, which is particularly prevalent in rural areas.
In the Upper Dales around 50 per cent of homes use the fuel, while two in five households around Masham, Leeming and in North Richmondshire also need kerosene to heat their homes.
Unlike gas and electricity, the price of heating oil is not covered by Ofgem’s price cap, which means these people are particularly exposed to price hikes.
Kerosene, the fuel used for heating oil, was particularly impacted by Iran’s blockade of the Straits of Hormuz, a narrow waterway out of the Gulf.
Following this, some customers had their contracts cancelled by suppliers as a result and were forced to reorder at much higher costs.
The CMA said around 1,700 customers were likely to have been affected, with some people paying between £150 and £350 more for replacement heating oil.
Customers whose suppliers have joined the compensation scheme, and who paid more for replacement oil, will receive a payment covering the difference between the original and replacement order.
Customers whose contracts were cancelled but who did not purchase a replacement will have their original order honoured at the agreed price.
Sarah Cardell, chief executive of the CMA, said: “Heating oil isn’t a luxury, it’s a necessity that many people rely on to have hot water and warm homes.
“During the price spikes earlier this year, hundreds of customers were left out of pocket or without fuel after their orders were cancelled.
“That’s why we’ve pressed suppliers to put it right.
“They’ve now agreed to compensate those affected by issuing compensation or honouring their original contracts.”
Earlier in the year, then prime minister Sir Keir Starmer announced a £27m support fund for households using heating oil in England.
At the time, he also asked the CMA to look at regulating the market further, amid reports of firms cancelling contracts and hiking up prices.