How the Iran conflict exposed Britain’s off-grid energy blind spot

“The Iran conflict has created a global energy crisis. Shefali Khanna , John Cui and Weiqi Hua explain how Britain’s off-grid residents, not connected to natural gas, are especially exposed and argue for the need of a more resilient energy system. Enjoying this post? Then sign up to our newsletter and receive a weekly roundup of all our articles. The UK has made genuine strides in its energy transition – the power grid is effectively decarbonised, and gas-fired generation has fallen significantly as wind and solar have scaled. But transition has been uneven. End users continue to rely on fossil fuels for heating, remain locked into combustion vehicles, and are exposed to the supply and price uncertainties that follow. The result is not simply a slow transition – it is an inequitable one, in which the burdens of fossil fuel dependency fall hardest on those with the least institutional protection. The 2026 Iran conflict has made this visible in the starkest terms. On 28 February, US and Israeli airstrikes triggered a disruption to energy flows through the Strait of Hormuz. Approximately 110 billion cubic metres of LNG exports – representing 19 per cent of global trade – have been disrupted since then, a shock that some analysts consider larger in scale than the Russian pipeline gas cuts of 2022. But unlike 2022, this crisis bears down most heavily on oil rather than gas – and that distinction exposes a structural blind spot that UK energy policy has long ignored: the approximately 1.5 million households that heat their homes using heating oil. Who bears the risk Around 62–68 per cent of households in Northern Ireland are not connected to the natural gas grid and rely on heating oil as their primary heating source. Significant off-grid populations also exist in rural Scotland, Wales, and the South West of England. These households sit entirely outside the regulatory perimeter of Ofgem’s price cap and are exposed to global oil price movements. While some local councils offer targeted fuel poverty schemes, these are piecemeal and cannot substitute for systemic regulatory coverage. The transmission from conflict to kitchen table has been rapid and severe. Brent crude rose from around $70 to over $110 per barrel within days of the conflict beginning. The initial strikes added $12 overnight; strait disruption added $8; fear of sustained interruption added $5; rising refining margins added $3 – reaching $103 per barrel within two weeks. Unlike ordinary commodity shocks, geopolitically motivated disruptions are deliberately sustained and cannot be hedged through standard financial instruments. Oil experts have warned the UK could be weeks away from fuel rationing if tankers do not resume sailing through the Strait of Hormuz – for off-grid households, supply availability is as pressing a concern as price. Between 26 February and 12 March – just two weeks – the average cost of 900 litres of heating oil in Northern Ireland rose from £536.72 to £1,037.48. Meanwhile, UK natural gas prices nearly doubled over the same period. Some customers in Scotland have seen prices nearly triple . The average oil-heated household requires around 1,700-1,800 litres per year ; if prices remain elevated into next winter, annual heating bills could exceed £2,000. Oil experts have warned the UK could be weeks away from fuel rationing if tankers do not resume sailing through the Strait of Hormuz – for off-grid households, supply availability is as pressing a concern as price. Two structural factors deepen the vulnerability. First, most oil-heating homes have poor insulation, which increases fuel consumption, deepens fuel poverty exposure, and makes the shift to heat pumps more difficult and costly. Second, heating oil is purchased in bulk, requiring timing decisions under uncertainty. During price spikes, liquidity constraints become binding: vulnerability is shaped by cash flow, not income alone. Off-grid homes are stranded at an earlier point in the fossil fuel dependency chain than the rest of the system – they never completed the transition away from oil that gas-grid households did decades ago. The regulatory gap Gas and electricity consumers in Great Britain have meaningful protection: supplier hedging requirements, a quarterly-reviewed price cap, and Ofgem’s financial resilience regulations that ring-fence suppliers’ financial positions and enable early intervention. The quarterly price cap review – introduced since 2022 – allows the regulator to identify supplier deficiencies more quickly and mitigate insolvency risk. But none of this applies to heating oil. Domestic gas and electricity prices for GB consumers are heavily regulated; heating oil is not, therefore is not protected by Ofgem’s price cap. The gap is most acute in Northern Ireland, where Ofgem has no jurisdictional power at all. This left 62-68 per cent of Northern Irish consumers who rely on oil heating consumers exposed to international fuel volatility without any regulatory protections. In Great Britain, while Ofgem regulates gas and electricity, heating oil remains entirely unregulated – costs are passed through immediately and in full. This is not a market functioning under stress: it is a market without the institutional architecture to moderate stress at all. The Starmer government has announced a £53 million support package for affected households. While welcome, analysts suggest the government will need a substantially larger package if the conflict drags on, given existing strains on the public finances. The New Economics Foundation has called for an essential energy guarantee for all households, warning that a prolonged crisis risks higher inflation, reduced demand, and potential recession – on top of an economy already weaker than in 2022. What needs to change The 2026 energy crisis demonstrates that decarbonisation and resilience are related but not the same. A cleaner power grid can still transmit fossil fuel shocks to consumers if gas remains the marginal source of flexibility – UK electricity prices are up around 60 per cent since the conflict began, compared to just 17 per cent in Norway, where electrified heating and reformed markets provide far greater insulation from international fossil fuel price volatility. With only around 6 per cent of UK cars currently electric, the fossil fuel exposure of UK households extends well beyond heating. Resilience requires knowing – and acting on – who bears residual risk. A cleaner power grid can still transmit fossil fuel shocks to consumers if gas remains the marginal source of flexibility. In the short term, crisis payment mechanisms must be extended explicitly to heating oil users. Mandatory market monitoring of pricing practices in the unregulated heating oil sector is needed – financial support alone is insufficient without it. Cooperative approaches to extend equivalent protections to Northern Ireland households should be urgently explored across the complex jurisdictional boundary. But these measures are responses to a crisis that better long-term policy could have reduced. The absence of incentives for improved home insulation and low-carbon heating has left off-grid households permanently exposed to volatile global oil prices. The government should introduce rural-targeted electrification of heating, invest in grid infrastructure in underserved areas, and design heat pump support specifically for older rural housing stock – measures that were already overdue before this crisis began. Reforms to wholesale electricity market pricing are unlikely alone to resolve the challenge of high consumer bills ; the deeper solution lies in reducing gas at the margin through renewables, storage, and demand-side flexibility, while simultaneously bringing off-grid households into the regulated system. The answer to the UK’s energy security challenge is already visible in the heating oil bills arriving through letterboxes in rural Northern Ireland, Wales, and the South West. A resilient energy system must address – and act on – who is exposed, not just how much clean energy is produced. Enjoyed this post? Sign up to our newsletter and receive a weekly roundup of all our articles. All articles posted on this blog give the views of the author(s), and not the position of LSE British Politics and Policy, nor of the London School of Economics and Political Science. Image credit: Runawayphill on Shutterstock The post How the Iran conflict exposed Britain’s off-grid energy blind spot first appeared on LSE British Politics .

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