Global crude and gas prices have surged following US and Israeli attacks on Iran, raising concerns about supply interruptions and potential power price increases.

UK Government Response and Industry Meeting

UK Chancellor Rachel Reeves announced she will meet with North Sea oil and gas operators to discuss the implications of the price surge and manage the uncertain period. This meeting was scheduled following her Spring Statement to parliament, which was deliberately devoid of major policy announcements to avoid further market disruption.

Energy Profits Levy (EPL) Status

The Spring Statement did not include an early rollback of the Energy Profits Levy, contrary to some industry hopes. Revenues from the EPL are now forecast to be £1.4 billion higher than previous estimates, totaling £4.1 billion from 2025 to the end of this year. Prior to the statement, industry representatives held extensive talks with the UK Treasury, centered on plans to repeal the levy before 2030, with expectations of a potential cut starting next year.

Industry Impact and Political Pressure

The industry has lobbied for over a year and a half to end the EPL, arguing that lower crude prices have squeezed margins. Since the levy's introduction, investment in the UK Continental Shelf has significantly declined, and job losses—including at major operators like Harbour Energy—have accelerated. This economic slowdown has created mounting political pressure on the government, especially ahead of local elections.

Government's Climate Mandate and Policy Tension

The Labour government, elected with a mandate to decarbonize power generation and lead on climate action, extended the EPL last year and restricted new exploration licenses. However, these policies are now facing growing calls for revision due to their negative impact on jobs and industrial activity, creating a tension between climate goals and economic pressures.