What factors affect heating oil prices?

Crude oil prices

If we go back to the very start of the heating oil supply chain, Kerosene 28 (heating oil) is produced from crude oil. So, changes in crude oil prices often influence the cost of heating oil. When crude prices move, heating oil usually follows.

However, the link is not instant or perfectly matched. It can take a few days for heating oil prices to adjust after crude oil rises or falls.

In some cases, especially during short-term spikes or dips, crude oil may fall while heating oil prices stay the same or even increase.

Even so, crude oil remains one of the strongest indicators of where Kerosene 28 prices are likely to head next.

Weather

Weather conditions can affect heating oil prices in more ways than just colder temperatures increasing demand. Disruptions caused by the following can all affect deliveries to suppliers and households, which may result in higher prices:

• Snow
• Ice
• Rough seas

If tankers cannot reach ports or road conditions slow distribution, supply can become limited, and prices may rise as a result.

The risk of running out of oil is also higher in winter, when usage increases and deliveries are more likely to be delayed.

A smart way to avoid these issues is to order before the winter rush, when prices are often lower, or to place smaller, more frequent top-up orders to keep your tank comfortably stocked.

Demand

A key reason heating oil prices rise in colder months is increased demand.

When temperatures drop, households use more heating and more customers place orders at the same time - putting pressure on supply and driving prices up.

You can reduce the impact by keeping an eye on your usage and planning top-ups when prices are typically lower.

Or, take the hassle out of it with Connected - automatic ordering when you need it, at our best price, all wrapped into one simple monthly payment.

OPEC

OPEC is one of the biggest drivers of changes in crude oil prices, which we know affects heating oil. The Organisation of the Petroleum Exporting Countries (OPEC) decides whether to increase or decrease oil production depending on demand. If OPEC decides to decrease oil production, heating oil prices usually rise, and vice versa.

There can be political drivers behind these decisions, but while you may not be able to control this, you can stay ahead and informed by keeping track of OPEC meetings before they happen.

Conflict in oil-producing countries

The geopolitical landscape in major oil-producing regions has a significant impact on global oil prices. Political tensions, conflict, or instability can create uncertainty in the market, which often pushes crude prices higher.

If sanctions or transport disruptions occur, especially in or around conflict zones, moving oil becomes more difficult. This reduces supply and can drive prices up even further, creating a cycle that is hard to break.

While these global events are outside any individual's control, staying informed can still help. Keeping up with major news stories and checking heating oil prices regularly gives you the best chance of ordering at a favourable time and securing a good deal.

VAT rate fluctuations

Government changes can influence home-heating costs. In 2025, heating oil continues to fall under existing reduced-rate VAT rules, but changes to VAT on other home-heating fuels may still affect how fairly oil-heated homes are treated.

Even without a VAT change, other taxes impact prices:

• Heating oil is delivered by large tankers, so distribution relies heavily on fuel.
• Increases in transport-related taxes or fuel costs can raise overall delivery expenses, which may be passed onto customers.

Although fuel duty remains frozen for 2025/26:

• Other rising business costs, such as labour and insurance.
• General delivery expenses that can still influence the final price customers pay.

Distribution and delivery costs

In addition to global factors like exchange rates, local distribution can also affect heating oil prices in the UK.

Some heating oil is imported, and transport costs — particularly in areas further from major oil terminals — can increase the final price for customers. These added delivery and distribution costs are often reflected in what you pay.

To help keep costs down, we work with trusted suppliers across the UK and group customer orders each day. This helps reduce delivery costs and secure the best price for your postcode.

Refining costs

Refining costs can also influence heating oil prices. If refineries need to upgrade equipment to meet new regulations, or if operational expenses like wages increase, these added costs are often reflected in the final price consumers pay.

Exchange rates

A significant share of the UK's heating oil is imported, so exchange rates directly influence pricing. When the value of the pound falls, imported oil becomes more expensive; when it strengthens, costs can ease and benefit consumers.

These factors often interact. Colder weather increases demand as households use more fuel and top up their tanks, which can push prices higher.

Crude oil fluctuations can have a similar effect, as price uncertainty encourages earlier or larger orders.