In response to a sharp increase in oil and gas prices triggered by joint US-Israeli attacks on Iran and the effective closure of the Strait of Hormuz, UK Prime Minister Keir Starmer announced government measures aimed at protecting the public and accelerating the transition to clean energy.

Government Response to Price Volatility

The government will introduce a three-month energy bill price cap starting in April. Starmer framed the price shock as a national security issue, arguing that dependence on international fossil fuel markets empowers hostile regimes. He emphasized that the ultimate solution requires reopening the Strait of Hormuz to restore market stability, while also welcoming the recent unprecedented International Energy Agency-led initiative to release oil stocks.

Accelerating Decarbonisation

Starmer pledged to accelerate the UK's decarbonisation efforts, stating the government will move faster towards its goal of decarbonising power generation by 2030. He characterized this push as a vital cause, despite opposition from those resisting clean energy. He rejected the idea that increased domestic oil and gas production from the North Sea could shield the UK from price volatility, noting it does not provide control over market prices.

Measures Targeting Oil and Gas Profits

The government has implemented policies to limit upstream activity and curb profits. These include stiffening the fiscal regime for oil and gas companies and restricting new licensing to tie-backs to existing infrastructure. Starmer highlighted the increased windfall tax (Energy Profits Levy), stating he campaigned for it during the 2022 price spike and will not allow companies to make huge profits from public hardship. This stance appears to contrast with recent comments from the Chancellor of the Exchequer regarding rolling back the levy before its 2030 deadline.