What Affects Heating Oil Prices?

Date Published: 05/03/2025

If you’ve ever checked the price of heating oil and wondered why it keeps changing, you’re not alone. One day, you’re paying a decent rate, and the next, the cost of heating oil has risen for no reason. So, what’s going on? The truth is heating oil prices fluctuate for a mixture of reasons – some predictable, some completely out of your control.

Supply and demand: The biggest factor

Like anything else, the price of heating oil is driven by supply and demand dynamics. When there’s plenty of heating oil supply and less demand, prices drop. But when everyone needs more oil at the same time, and there’s less of it to go around, prices begin to rise.

How crude oil prices set the starting point

Since heating oil comes from crude oil, any change in crude oil prices has a direct impact on what you pay. A few things that can push supply up or down include:

• Oil-producing nations cutting production – Less oil in the market means higher prices.
• Geopolitical tensions – If there’s political unrest or a trade dispute in an oil-producing country, it can disrupt oil supplies and drive costs up.
• Market speculation – Investors betting on future shortages can cause price spikes before anything even happens.

Why winter sends prices soaring

Heating oil prices typically spike during the winter months due to a surge in demand. As temperatures drop, off-grid homes use more fuel, causing the demand for heating oil to rise sharply. At the same time, refineries and suppliers can only produce and store so much oil at once, meaning limited supply during peak months pushes prices even higher.

Winter weather also makes heating oil delivery more difficult. Snow and ice can slow transport, causing delays and shortages, which further drive up costs. In contrast, during the warmer months, demand drops, making it easier for suppliers to keep prices lower.

How economic and market conditions affect heating oil prices

Economic conditions and market competition play a big role in heating oil prices, with factors like inflation, energy demand, and supplier pricing all affecting what you pay.

• Inflation and rising costs – Over time, inflation increases the cost of refining, transportation, and heating oil delivery, causing prices to increase.
• Economic growth and demand – When industries expand, they consume more fuel, driving up heating oil demand and prices.
• Market competition – Not all heating oil suppliers charge the same; some offer competitive rates, while others price higher based on location, convenience, or service quality.

Geopolitical events and government policies

Global conflicts and government regulations can really affect heating oil costs, often leading to price fluctuations and supply shortages.

• Wars and political unrest – If an oil-producing country experiences conflict, it can disrupt oil production levels, reducing supply and raising prices. We saw this in recent years following the Russian invasion of Ukraine.
• Trade restrictions and sanctions – Limits on oil exports can shrink the supply of petroleum, making heating oil more expensive worldwide.
• Environmental regulations – Stricter rules on refining emissions can increase production costs, which are then passed on to consumers.
• Carbon taxes and green energy policies – While designed to encourage cleaner alternatives, they often lead to higher heating oil expenses over time.

How weather and natural disasters disrupt heating oil supply

Extreme weather can also directly impact the price of heating oil, especially during the winter months. Whether it's a sudden cold snap or a major storm, these events can disrupt the heating oil supply, increase demand, and cause price fluctuations.

Cold weather and harsh winters mean higher heating expenses, but unexpected cold snaps or extended periods of freezing temperatures can cause prices to spike even more. When demand surges, local heating oil supplies run out faster, putting pressure on suppliers to keep up. This often leads to delivery delays and supply shortages, both of which drive up costs.

Choose Your NRG for affordable, reliable heating oil

At Your NRG, we keep heating oil and bulk fuel affordable, reliable, and accessible for homes and businesses across most of the UK all year round. With competitive prices, dependable delivery, and a network that reaches even remote areas, we make it easy to get the domestic heating oil you need when you need it. Get a quick online quote today from a provider that puts you first. Stay warm for less with Your NRG!