Oil Price Volatility Returns: What UK Businesses Need to Know in 2026

Written By Leanne Li

Global energy markets have been thrown back into volatility, with oil and gas prices surging following escalating tensions in the Middle East. Brent crude has pushed well above $100 per barrel, while UK gas prices have risen sharply-driving renewed inflation concerns and cost pressures for businesses.

For UK businesses, this is more than headline news. It’s already impacting contract availability, pricing strategies, and supplier appetite for risk.

Why Prices Are Rising Again

The current spike is being driven by a combination of geopolitical disruption and supply constraints. Attacks on energy infrastructure and risks to key shipping routes like the Strait of Hormuz have created one of the most significant oil supply shocks in recent years.

As a result:

  • Oil prices have surged past $100/barrel

  • UK gas prices have jumped by as much as 25%

  • Wholesale markets are reacting with extreme short-term volatility

For energy buyers, this creates a familiar but difficult environment: fast-moving prices and reduced certainty.

Suppliers Pull Back From Fixed Contracts

One of the most immediate impacts in the UK market is reduced availability of fixed-term contracts.

Several suppliers have already withdrawn fixed-price deals entirely due to the unpredictability of wholesale costs.

This has two major implications for businesses:

  • Fewer opportunities to “lock in” pricing

  • Greater exposure to variable or short-term contracts

In practice, this means procurement windows are narrowing - and timing decisions has become more critical than ever.

What the UK Government is Doing

The government has begun responding, although current measures are primarily focused on households rather than businesses.

1. Targeted Financial Support

A £50m+ support package has been announced to help households reliant on heating oil, particularly in rural areas.

There are also indications that further targeted support is being modelled, depending on how long the crisis persists.

2. Energy Bill Relief (Short-Term)

Earlier policy changes mean households will see around £150 off energy bills from April, although this is likely to be offset by rising wholesale costs later in the year.

3. Demand Reduction Measures

The UK is aligned with international recommendations to reduce energy demand, including:

  • Encouraging remote working

  • Promoting public transport and car sharing

  • Improving energy efficiency

These measures are being positioned as temporary but may influence long-term consumption patterns.

4. Longer-Term Energy Strategy

The government is accelerating its push toward domestic and renewable energy generation, including:

  • Faster renewables deployment

  • New “plug-in solar” initiatives

  • Continued rollout of state-backed energy investment programmes

The strategic message is clear: reduce reliance on volatile global fossil fuel markets.

What This Means for Businesses

While most support is currently consumer-focused, businesses are already feeling the impact:

Cost Pressure Returns

Rising wholesale prices are feeding directly into business tariffs, particularly for those coming off contract in 2026.

Reduced Supplier Appetite

Suppliers are more cautious, with:

  • Fewer long-term offers

  • More stringent credit requirements

  • Increased pricing risk premiums

Procurement Strategy Is Critical

In this market, a “wait and see” approach can be costly. Businesses need to:

  • Monitor markets closely

  • Act quickly when pricing opportunities arise

  • Consider flexible or blended purchasing strategies

How Energy Brokers Add Value Right Now

This is exactly the type of market where a proactive broker becomes essential.

An experienced broker can:

  • Access a wider range of suppliers (including those still offering contracts)

  • Time the market more effectively

  • Structure contracts to balance risk and cost

  • Provide forward-looking insight on pricing trends

Final Thoughts

The return of oil-driven volatility is a reminder that energy markets remain highly exposed to global events. With suppliers tightening and prices rising, UK businesses face a more complex procurement landscape than at any point since the last energy crisis.

Those that stay informed - and act strategically - will be best positioned to manage costs and maintain stability through the months ahead.

Leanne Li
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