Why are heating oil and diesel so expensive? How overseas conflict affects UK fuel prices
Oil and refined fuels are traded in global markets, so events affecting production, refining, shipping, or supply in one part of the world can influence prices elsewhere. This has been particularly evident in 2026, with conflict in the Middle East causing significant disruption and volatility across global oil markets.
The effect has been particularly visible in the UK heating oil market. The Competition and Markets Authority (CMA) found that average heating oil prices increased by 64% between February and March 2026, from 64ppl to 104ppl, before reaching 123ppl in April. It found that higher wholesale costs accounted for 83% of the March retail increase.
So, why can an overseas conflict affect what households, farms, and businesses pay for fuel in the UK?
Why is diesel so expensive?
The simplest answer to “Why is diesel so expensive?” is that diesel is a refined oil product, and its wholesale price is influenced by international oil markets.
Crude oil is only part of the picture. The price of finished diesel also reflects refinery capacity, inventories, shipping costs, regional demand, currency movements, and the availability of the particular refined product required.
Geopolitical events can affect several of these factors at once. A conflict can threaten oil production, disrupt shipping routes, reduce the availability of refined products, or make transporting fuel more difficult or expensive. Prices can also respond before a physical shortage occurs, as traders anticipate potential disruption to future supply.
This is why the question “Why are diesel prices rising?” cannot always be answered simply by looking at the price of crude oil.
For businesses that rely on regular diesel deliveries, understanding these wider influences can help when planning fuel requirements. Craggs Energy supplies bulk diesel for commercial and industrial customers, with delivery and fuel-management options designed around individual operations.
Why has heating oil gone up in price?
Domestic and commercial heating oil is also affected by international refined-fuel markets, but its pricing has a more specific relationship with the European kerosene market.
In the UK and Ireland, the main wholesale price reference for heating oil is the European wholesale price of jet fuel, or Jet Kero. Heating oil and jet fuel are both kerosene-based products, so their prices are closely linked within the European market.
When the recent conflict began on 28 February 2026, wholesale Jet Kero prices increased sharply and became highly volatile. This was reflected in UK heating oil prices, which rose from an average of 64ppl in February to 104ppl in March, reaching 123ppl in April. Prices then fell by 15% in May, demonstrating how quickly the market can move in either direction.
The price a customer pays therefore reflects the wholesale market and the cost of replacing fuel supplies, rather than simply what has happened to crude oil prices.
Why are diesel and heating oil prices not exactly the same?
Diesel and heating oil come from the same broad oil-refining system, but they’re different products with different market dynamics.
UK heating oil is particularly linked to the wholesale kerosene and Jet Kero market, while diesel is influenced by the wholesale gas oil and diesel market. Both are affected by wider oil supply and demand, but refinery operations, inventories, seasonal demand, shipping conditions, and regional market conditions can cause them to move differently.
For farms and businesses, a red diesel price increase can therefore reflect a combination of crude oil costs, refined-product prices, supply conditions, and market expectations.
Why does conflict in the Middle East affect UK fuel prices?
The connection between Middle East conflict and UK fuel prices comes down to the global nature of the oil market.
Fuel doesn’t have to be travelling directly from a particular Gulf country to the UK for disruption there to affect British prices. If a major source of supply or transportation is disrupted, buyers may need to compete for alternative supplies. Traders can also adjust their expectations about future availability, causing wholesale prices to move before a physical shortage reaches the market.
The reverse can happen when supply routes reopen, alternative supplies become available, inventories improve, or demand falls.
This means that an overseas disruption can affect UK fuel prices even when the immediate supply chain serving a particular customer has not changed.
Why is the Strait of Hormuz important?
The Strait of Hormuz is a narrow waterway between Iran and the Arabian Peninsula, connecting the Persian Gulf with the Gulf of Oman and the Arabian Sea. It’s one of the world’s most important oil transit routes. The International Energy Agency (IEA) estimates that around 20 million barrels of crude oil and oil products passed through the Strait each day in 2025, which is equivalent to approximately 25% of global seaborne oil trade.
This helps explain why disruption in the Strait can have such a significant effect on global oil prices. The issue isn’t simply whether the UK receives oil through the Strait. A large proportion of internationally traded oil normally passes through one relatively narrow route, meaning disruption can increase competition for supplies elsewhere.
Alternative export routes exist, but their capacity is limited. A significant disruption can therefore reduce the amount of oil available to the wider market and put upward pressure on prices.
How does an overseas conflict eventually affect the price you pay?
There are several stages between an overseas event and the price of fuel delivered to a UK customer:
Conflict or geopolitical tension
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Concerns about production, refining, or shipping
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Changes in expectations about future supply
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Wholesale oil and refined-product prices move
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Importers, refiners, and suppliers face different replacement costs
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UK fuel prices respond
The effect isn’t always immediate, and different fuels can move by different amounts. Looking only at the crude oil price doesn’t necessarily tell you what will happen to your next heating oil or diesel delivery.
Heating oil price forecast UK – can prices be predicted?
If you’re looking for a heating oil price forecast UK customers can rely on for the coming months, the honest answer is that the exact price cannot be predicted with certainty.
The outlook for heating oil can be affected by:
- international crude and refined-product prices
- the availability of kerosene and Jet Kero
- shipping and supply routes
- global and seasonal demand
- inventories
- currency movements
- refinery capacity
- geopolitical developments
The IEA’s August 2026 Oil Market Report continued to highlight significant disruption to global oil supply and increasingly tight refined-product markets, including diesel and jet fuel.
Rather than trying to identify the exact lowest price, it can be more useful to consider how much fuel is likely to be needed and how much flexibility there is around the timing of the next delivery.
For commercial and agricultural customers with more complex requirements, our fuel management services can help monitor usage and plan deliveries around operational needs. The service includes scheduled fuelling plans and remote tank monitoring through TankPal.
Will diesel prices go down?
So, will diesel prices fall? They could, particularly if supply concerns ease, alternative supplies become available, demand weakens, or shipping conditions improve.
Equally, prices can rise again if geopolitical tensions increase or another part of the supply chain becomes constrained. This means there’s no reliable way to predict exactly when diesel prices will fall.
For households, farms, and businesses that depend on regular fuel deliveries, the focus is therefore better placed on managing fuel requirements than trying to predict every movement in the market.
What does this mean for UK households, farms, and businesses?
The events of 2026 demonstrate how quickly fuel markets can change, but that doesn’t mean customers need to panic-buy fuel. It’s simply a reminder that planning ahead can provide more flexibility when market conditions change.
For households, keeping an eye on heating oil levels can reduce the risk of needing an urgent delivery. Our CosyConnect remote tank monitoring service can monitor heating oil levels and automatically reorder when the tank reaches an agreed level.
Farms and businesses can review expected winter usage, monitor tank levels, and consider delivery requirements before demand increases. TankPal provides remote monitoring for commercial fuel tanks and can automatically reorder fuel when levels fall below an agreed threshold.
Global oil markets will always be influenced by factors outside an individual customer’s control, including overseas conflict, weather, refinery capacity, shipping, inventories, demand, and wider economic conditions. What you can control is how well you understand your own fuel requirements and how prepared you are for changes in the market.
For help planning your winter fuel requirements, get in touch with our team to discuss heating oil, red diesel, fuel management, and delivery options.
