Heating oil and haulage hit by Middle East conflict

Farmers and rural businesses are facing a surge in fuel and transport costs as the conflict in the Middle East drives volatility in global oil markets, prompting warnings of a “double whammy” for the rural economy.

Oil prices have surged in recent days amid escalating tensions in the Gulf, with Brent crude oil prices climbing to $107.20 (£80) a barrel today, up 15.65% on the day, amid ongoing disruption to shipping through the Strait of Hormuz – a route used by roughly a fifth of the world’s oil supply.

The rising costs are already feeding through to UK fuel markets. Red and white diesel prices have climbed to a 16-month high, while analysts warn further increases are likely if crude prices remain elevated.

See also: Fuel and fertiliser prices soar as Middle East tensions rise

Average UK diesel prices are about 150p/litre for white diesel, while red diesel prices for farms have surged to about £1/litre.

Rural communities could be particularly exposed because of their heavy reliance on heating oil and red diesel.

Heating oil cost surges

Liberal Democrat Orkney and Shetland MP Alistair Carmichael has written to ministers and the Competition and Markets Authority urging urgent action over what he described as rapid price increases for heating oil and farm fuel.

He warned that farmers and rural households could face a “double whammy” if both heating oil and red diesel costs spike simultaneously.

“A rapid increase in the cost of heating oil and red diesel would mean a double whammy of harm to the rural economy – and to island communities such as our own in particular,” he said.

Mr Carmichael added that fuel remains one of the most significant input costs for farmers and crofters, particularly in areas not connected to the gas grid where heating oil is still widely used.

Campaigners say about 1.5m UK homes rely on heating oil rather than mains gas, leaving them exposed to sudden price shocks because the fuel is not covered by Ofgem’s energy price cap.

Shadow energy secretary and Conservative MP for East Surrey Claire Coutinho has written to the government to raise concerns about reports of heating-oil deliveries being cancelled and re-offered at much higher prices, calling for stronger regulation and greater transparency in the market.

Meanwhile, the logistics sector has warned that higher fuel costs could ripple through supply chains and push up prices for goods including food and farm inputs.

Haulage costs up

Hauliers play a crucial role in moving agricultural produce, fertiliser and feed across the country, meaning rising diesel prices could quickly translate into higher costs for farmers.

Business group Logistics UK said disruption to global shipping caused by the Middle East conflict was already affecting trade routes and driving up oil prices.

Sugar beet grower and haulier Tom Craven runs Craven Transport, an agricultural bulk haulage firm based at Poplar Farm, Stickford, Lincolnshire, with his father Andrew and brother James.

The business loads and hauls beet for about 120 growers, handling 400,000-500,000t a year with a fleet of 28 lorries and 12 sub-contractors during the beet campaign.

Mr Craven said rising fuel costs were already hitting the business. “It’s not looking good. We’ve already seen a surge in diesel prices and it looks set to get worse,” he said.

While fuel escalators protected the company during the beet lifting campaign, general haulage is exposed unless merchants absorb some of the increase.

He added he was glad to have bought fertiliser forward, but regrets locking into the oilseed rape price before last week’s rise.

Farmers Weekly has asked the Department for Energy and Net Zero to comment.