1.5 million UK households impacted after 16% price increase in October
UK heating oil prices rose 16%, from an average of 34.40PPL (incl. VAT) in September to 39.90PPL (incl. VAT) in October. This represents the steepest monthly heating oil increase since the winter of 2010, making it the third biggest price hike on record. Over the same period, the price of crude increased by 8.5%, including a one year high of $53.29 per barrel on the 10th October. This is widely believed to be the most significant factor affecting heating oil prices.
Around 1.5 million homes in the UK rely on heating oil to heat their homes. This increase could see the cost of 1,000 litres rise to £399 (based on the UK average), an additional £55 since September.
“Whilst the recent price rise has been dramatic, heating oil still represents the cheapest form of energy available after historic price lows earlier in 2016. We do recognize times are uncertain for heating oil users, and we will continue to work hard for customers to provide the best price, service and convenience through our nationwide network of selected local suppliers.”
– Ian Ronald, BoilerJuice CEO
The last time prices increased to these levels (December 2010), suppliers were struggling to make deliveries as blizzards caused chaos across the UK.
This time around, prices have soared due to recent world events: the weakened Pound Sterling following the UK referendum result; and speculation that many major oil producers, in particular Russia, were open to striking a deal with OPEC to reduce oil output.
Considering that heating oil prices increased sharply following speculation around the last OPEC meeting where the organization reached an ‘agreement to agree’, it is reasonable to assume that prices could increase further before the next OPEC meeting takes place on 30th November.Many traders have speculated prices rising above $65 per barrel in 2017.