As we wrap up the first month of 2026, fuel markets are adjusting after a period of sustained winter demand and continued changes across UK fuel infrastructure and energy policy. January often marks a point where the industry reflects on pressures built up over winter and considers what they may mean for the year ahead.
This update looks at current market conditions, recent developments at the former Prax Lindsey site, and a government consultation that could shape the future of heating for off-grid homes and businesses.
Global oil markets have remained relatively firm into the New Year. Winter demand across Europe and parts of Asia has continued to support crude prices, while geopolitical uncertainty and shipping risks mean the market remains sensitive to disruption.
While there have been no sharp price spikes so far in January, the overall structure of the market means movements can occur more quickly than in previous years. With less spare capacity across the system, even modest changes in supply or demand can have a noticeable impact on wholesale fuel prices.
One of the most important structural factors affecting the UK fuel market remains domestic refining capacity. The closure of the Prax Lindsey Oil Refinery in 2025 removed around 10% of the UK’s refining capability, increasing reliance on imported fuels and reducing overall supply flexibility.
In January, Phillips 66 confirmed the acquisition of assets at the former Prax Lindsey site following its liquidation. While this represents a positive step for maintaining fuel infrastructure in the region, it is important to note that the site will not return to standalone refining operations.
Instead, the facilities will be used primarily for storage and logistical support, integrated with Phillips 66’s nearby Humber Refinery. This helps strengthen distribution resilience across the North and Midlands but does not reverse the longer-term reduction in UK refining capacity.
Exchange rates continue to play a key role in UK fuel pricing. Because fuel is traded internationally in U.S. dollars, movements in Sterling feed directly into wholesale costs.
As a general guide, a 3–5% weakening of the pound can add a similar percentage to the cost of imported fuel, even if global oil prices remain steady. With reduced refining capacity and greater reliance on imports, the UK fuel market is more exposed to currency movements than it was in the past.
Following the Autumn Budget and wider economic signals at the start of 2026, Sterling remains an important factor influencing fuel costs for homes, farms, and businesses.
January has seen an important shift in how the future of heating for off-grid homes is being discussed at Government level. A new consultation is underway examining how households and businesses not connected to the gas grid will heat their properties in the years ahead - and, crucially, how practical and affordable those options are for rural communities.
The Future Ready Fuel campaign , led by trade associations UKIFDA and OFTEC, highlights the role that renewable liquid fuels, such as HVO, could play in reducing emissions while continuing to use existing heating systems. For many oil-heated homes, this approach offers a more realistic pathway to lower-carbon heating than wholesale system replacement.
At Rix Petroleum, we believe it’s vital that the needs of off-grid households are fully understood as these decisions are shaped. For many rural properties, solutions that can reduce emissions while continuing to use existing heating systems may offer a more practical and affordable route forward.
The consultation remains open until 10 February, and its outcome could influence heating policy for years to come.
At Rix Petroleum, our focus remains on dependable supply and clear communication.
For domestic customers, heating oil availability remains stable during peak winter demand, while policy discussions highlight the importance of staying informed about future heating options.
For farms and businesses, fuel remains a critical operating input. Structural changes in refining reinforce the value of secure supply chains and experienced distribution partners.
For all customers, understanding both short-term market conditions and longer-term policy direction can support better planning through 2026.
As we move further into 2026, fuel markets will continue to be shaped by a combination of global supply conditions, exchange rate movements, and evolving UK energy policy. While winter demand is expected to ease later in the season, reduced supply flexibility means the market is likely to remain sensitive to change.
We will continue to monitor developments closely and share regular updates to help you understand what’s happening in the fuel market and what it means for you.
As we approach the end of the year, fuel demand across homes, farms, and businesses typically reaches its seasonal peak. Colder weather increases heating requirements, while many commercial operations continue at full pace through December.
This monthly UK fuel market update looks at current price trends and what they mean for heating oil users, farms, and businesses across the UK as we head towards the New Year.
Market Trends
Global oil markets have remained firm through November and into early December. Brent crude has been supported by a combination of tighter supply conditions and steady winter demand, particularly across Europe and Asia. While prices have not seen dramatic spikes, they remain elevated compared with earlier in the autumn.
One key reason the market feels more sensitive this winter is reduced flexibility in fuel supply, both globally and closer to home. In the UK, the closure of the Prax Lindsey Oil Refinery earlier this year removed around 10% of domestic refining capacity, increasing reliance on imported fuel. Combined with sanctions-related constraints and wider geopolitical tensions, this has left the fuel market more exposed to disruption and price movement than in previous winters. These factors continue to shape wider fuel market trends in the UK, particularly for diesel, gas oil, and heating oil.
Exchange rates remain another important driver of UK fuel costs. Because fuel is traded internationally in U.S. dollars, movements in Sterling feed directly into wholesale pricing. As a rule of thumb, a 5% weakening of the pound can add a similar percentage to the cost of imported fuel, even if global oil prices remain unchanged. Recent currency movements following the Autumn Budget have therefore added to cost pressures already present in the market.
Winter Demand and Supply
Seasonal demand is now firmly in place, with winter fuel consumption typically rising by 10–15% across domestic heating oil and commercial fuels during December and January. Domestic heating oil usage increases as colder conditions set in, while farms and businesses continue to rely on diesel and gas oil to keep operations running smoothly.
Across the industry, winter always places additional pressure on logistics and supply chains. However, despite wider market volatility and tighter supply conditions, physical fuel availability in the UK remains stable. The combination of reduced domestic refining capacity and strong seasonal demand does, however, mean the market has less room to absorb shocks than in quieter periods of the year.
What This Means for Rix Petroleum Customers
At Rix Petroleum, our focus remains on dependable supply and clear communication.
Looking Ahead to 2026
As we move towards the New Year, fuel markets will continue to respond to a mix of global and domestic influences - including winter demand levels, currency movements, OPEC+ production decisions, and ongoing geopolitical developments. While short-term fluctuations are always possible, the fundamentals of UK fuel supply remain sound.
Looking ahead, these factors will help shape the UK fuel market outlook for 2026, particularly as winter demand eases and attention turns back to global supply conditions and economic confidence.
What Affects Fuel Prices in the UK?
UK fuel prices are influenced by a combination of global oil markets, exchange rates, seasonal demand, refining capacity, and geopolitical developments. Because fuel is traded in U.S. dollars, movements in Sterling can have a direct impact on wholesale costs for heating oil, diesel, and gas oil. When supply flexibility is reduced - as it is this winter - these influences tend to be felt more quickly.
As the colder weather draws in, households and businesses are preparing for increased demand for heating oil - making this month’s developments in the UK fuel sector particularly relevant. With the government having just delivered the 2025 Budget, there are several new policy items and economic signals that will shape the fuel market in the coming months.
Key Takeaways from the 2025 Budget
Taken together, these moves suggest that while the government is maintaining relief for traditional fuel consumers in the short term, it is also preparing for a structural shift in taxation as EVs become more common.
What This Means for Heating Oil and Domestic Customers
What This Means for Commercial, Agricultural & Transport Customers
What to Watch Going Forward
Outlook for Rix Petroleum Customers
In the near term (next 6–12 months), the 2025 Budget provides a relatively stable taxation environment for fuel and heating oil - helping to keep prices more predictable than they might otherwise have been.
However, in the medium term (from 2026 onward), structural shifts in energy and transport policy - combined with the return of the fuel duty - suggest that fuel demand could become more volatile. For commercial customers, that means building resilience and flexibility will be key. For domestic customers, it’s a good moment to consider energy efficiency measures (how to get the most out of your heating oil, better insulation, fuel-saving strategies, etc.) to mitigate future uncertainties.
As we move deeper into autumn, fuel demand naturally begins to rise. Farms and businesses are busy with seasonal work, while homes across the UK start preparing for cooler months ahead. Against this backdrop, global developments have taken centre stage once again - prompting us to bring this month’s update forward.
Market Trends
Fuel markets have become more volatile in recent weeks following new U.S. sanctions introduced by President Trump against two of Russia’s largest oil producers, Rosneft and Lukoil. These measures restrict global trade with the companies and have raised concerns over tighter crude supply.
As a result, oil prices have risen by around 4-5% since the announcement, with Brent crude now trading near the high-$70s per barrel. The move comes at a time when many economies are already managing inflationary pressures, meaning even modest increases in crude prices can feed through to refined fuels such as diesel, gas oil, and kerosene.
For UK buyers, exchange rates remain another key factor. With fuel traded globally in U.S. dollars, any weakening of the pound can add further upward pressure to wholesale prices - something we are watching closely.
Looking ahead, the UK Autumn Budget at the end of November may also play a role in shaping currency movements. Fiscal decisions and revised economic forecasts could influence the strength of Sterling, and in turn, the cost of imported fuels.
The Impact of U.S. Sanctions
The U.S. sanctions are designed to limit Russia’s ability to export energy and access global finance. While the UK does not import large volumes of Russian crude directly, these measures reduce overall supply flexibility in the global market. As refiners and traders adjust, prices have moved higher in anticipation of tighter availability over the coming months.
This kind of development highlights how quickly international politics can influence the everyday cost of fuel - even for customers here in the UK.
What This Means for Rix Petroleum Customers
At Rix Petroleum, our first priority remains continuity of supply and transparency in pricing.
Despite recent market turbulence, our supply networks means we continue to maintain stable and reliable deliveries across all products.
Looking Ahead
Over the coming months, market direction will depend on several factors - how long U.S. sanctions remain in force, the response from OPEC+ producers, and overall global demand through the winter. While short-term volatility is possible, Rix Petroleum’s strong UK supply position means our customers can remain confident that their fuel needs will be met.
Whatever happens internationally, we’re here to make sure your operations, homes, and businesses stay supplied and supported.
As always, we’ll continue to monitor developments and provide clear monthly updates to help you plan with confidence.
As we head into autumn, both farms and businesses are gearing up for the change in the seasons while domestic heating oil users begin preparing for colder months ahead. This makes it a good time to reflect on what is happening in the wider fuel market, how prices are moving, and what recent developments in UK refining mean for customers.
Market Trends
Global oil prices have been relatively steady through September, with Brent crude trading in the mid-$60s per barrel. This represents a slight easing compared to earlier in the summer, as softer demand outlooks and additional pipeline flows have helped balance the market. For UK buyers, however, volatility is still a theme. Because oil is traded in US dollars, the strength of the pound also plays an important role in determining wholesale diesel, gas oil, and kerosene costs. Even modest shifts in exchange rates can quickly ripple through to farm, business, and household budgets.
The Collapse of Prax Lindsey Oil Refinery
One of the most notable industry stories has been the collapse of the Prax Lindsey Oil Refinery in North Lincolnshire. The site entered insolvency at the end of June after months of financial difficulties, and by July it was moving towards closure. In early September, the High Court froze £150 million of assets linked to the owner, further underlining the seriousness of the situation.
The refinery once represented around ten percent of UK refining capacity, and its closure has prompted wider concerns about domestic energy resilience. Several Prax-associated storage and terminal businesses have also entered liquidation, meaning certain supply points may face reduced capacity or temporary suspensions.
What This Means for Rix Petroleum Customers
While the Prax story has raised understandable concerns across the market, we want to reassure our customers that Rix Petroleum’s supply chain has not been affected, and throughout this uncertain period we have maintained a steady and reliable flow of fuel.
For farms and businesses, this means continuity of supply during a busy autumn season. While some in the industry may be facing tighter logistics, our customers continue to benefit from consistent bulk fuel deliveries for gas oil, diesel, and heating oil. In addition, with winter fuel coming into supply mid-October, we also offer a solution for customers who would like their fuel winterised earlier. This gives businesses and farms peace of mind that their operations remain protected against cold weather, even before the seasonal grade becomes available.
For domestic users, our kerosene supply remains strong, allowing households to order with confidence as they prepare for colder weather.
Looking Ahead
The months ahead will be shaped by a combination of global and domestic forces. Internationally, crude oil prices will continue to respond to OPEC+ production decisions, shifting demand patterns, and geopolitical developments. Closer to home, the closure of the Prax refinery has made headlines, but our customers can be reassured that Rix Petroleum is not exposed to this disruption.
Whatever happens in the wider market, we are here to keep your fuel supplies steady. We will continue to monitor developments closely and share monthly updates, so you always know what is happening in the fuel market and what it means for you.
