Conflict in the oilfields of the Middle East will have a greater impact than desired with this being the second time in four years that fossil fuels have been weaponised due to military actions. And once again, customers worldwide will be handed higher and rising prices for their domestic, commercial and industrial energy needs.

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The conflict is receiving 24hour media coverage – and the current facts that we can be as certain of are this –  In late February the military action started with the USA and Israel making strikes on Iran. One of the counter-measures from Iran was closing access to the Straits of Homuz, a vital shipping lane carrying oil tankers with 20% of the world’s crude oil supply. 

A number of ships have been granted safe passage from India and one from Turkey. Other countries such as Italy, France and China are all seeking talks with the Iranian leadership to gain access through the shipping lane. China will push talks rapidly as 45% of national oil requirements are met through the trading passage.  

As a result of this blockade the price of Brent crude oil was recently recorded at $105.70 a barrel. This is a 40% increase from before the start of the conflict. 

So what does this mean to the UK customer?

Essentially, this conflict means additional costs to households for energy requirements. Around 1.5 million UK off grid premises rely on oil for heating and hot water. The BBC reported in mid-March that “A home-owner, Denise, from rural Suffolk, has seen the price of oil she uses for hot water and central heating rise from £275 for 500 litres to £800….” The UK government has since confirmed a £53 million financial support package to those vulnerable households which rely on oil. 

Natural gas costs have also been affected. A UK mainstream newspaper reported that the price of natural gas had risen 93%. The newspaper quoted analysts that monitor UK energy markets and costs as follows, “Dr Craig Lowrey, principal consultant at analysts Cornwall Insight, said: “The UK’s dependence on global gas markets means movements in international wholesale prices feed directly into domestic bills.”

Qatar – a major producer of LNG (Liquified Natural Gas) has halted production, which is estimated to fulfil 20% of global supply. This pause in production has caused widespread concerns over supply chain issues. Now major importers of LNG such as China and India must now source supply from elsewhere.

Both China and India are believed to import around a third of all Qatari LNG and will now seek a replacement supplier, therefore increasing the value of LNG and subsequently adding to the final cost. The UK is also reliant on LNG for electrical generation, with around 28%-30% of all UK electricity being produced in 2024-2025 deriving from LNG imports. Throughout 2023, LNG made up 42% of total natural gas UK imports. As the UK relies on LNG and will have to import at an increased value, costs will filter down to the customer.

The conflict has reintroduced a debate regarding national energy security. A report commissioned by Renewables UK has stated the belief that energy security should be viewed in line with national security measures. The report also suggests that deployment of renewables should be widened as fossil fuel costs are subject to geopolitical influence –  in ordinary speech that means wild price fluctuations.  

There is already quantifiable evidence that proves adding renewables to UK national grid capacity reduces electrical costs to the UK customer. A recently published report explained how adding renewables into the UK electrical grid has reduced energy costs and protects customers from increases to natural gas cost fluctuations.

Jess Ralston, Head of Energy at the Energy and Climate Intelligence Unit (ECIU) was recently quoted: “Fortunately, any looming crisis is unlikely to hit electricity bills quite as hard because more renewables have been linked up to the grid meaning we don’t have to run gas power stations as much. Last year renewables cut the wholesale price of electricity by a third.”

By domestically generating sustainable and renewable sources of energy the UK not only reduces carbon output but also strengthens domestic energy security and reduces energy costs. 

Specifiers, contractors and installers should consider using manufacturers who have positioned themselves to include a selection of low carbon technology in their inventories. As natural gas costs are expected to rise soon technology that is designed to accept clean electricity can assist in reducing long- and short-term energy costs. Customers should also evaluate what services are provided in system design and specification processes by manufacturers.

Rinnai is keen to share all information with the UK customer that potentially affects appliance and energy options. Rinnai works hard to identify any domestic or global energy related news as to encourage better customer decision making.

RINNAI OFFERS CLEAR PATHWAYS TO LOWER CARBON AND DECARBONISATION PLUS CUSTOMER COST REDUCTIONS FOR COMMERCIAL, DOMESTIC AND OFF-GRID HEATING & HOT WATER DELIVERY

www.rinnai-uk.co.uk/about us/H3

• Rinnai’s range of decarbonising products – H1/H2/H3 – consists of hot water heating units in gas/BioLPG/DME, hydrogen ready units, electric instantaneous hot water heaters, electric storage cylinders and buffer vessels, a comprehensive range of heat pumps, solar, hydrogen-ready or natural gas in any configuration of hybrid formats for either residential or commercial applications. Rinnai’s H1/2/3 range of products and systems offer contractors, consultants and end users a range of efficient, robust and affordable low carbon/decarbonising appliances which create practical, economic and technically feasible solutions. 
• Rinnai is a world leading manufacturer of hot water heaters and produces over two million units a year, operating on each of the five continents. The brand has gained an established reputation for producing products that offer high performance, cost efficiency and extended working lives. 
• Rinnai products are UKCA certified, A-rated water efficiency, accessed through multiple fuel options and are available for purchase 24/7, 365 days a year. Any unit can be delivered to any UK site within 24 hours. 
• Rinnai offer carbon and cost comparison services that will calculate financial, and carbon savings made when investing in a Rinnai system. Rinnai also provide a system design service that will suggest an appropriate system for the property in question. 
• Rinnai offer comprehensive training courses and technical support in all aspects of the water heating industry including detailed CPD’s. 
• The Rinnai range covers all forms of fuels and appliances currently available – electric, gas, hydrogen, BioLPG, DME solar thermal, low GWP heat pumps and electric water heaters More information can be found on Rinnai’s website and its “Help Me Choose” webpage. 

RINNAI FULL PRODUCT AVAILABILITY 24/7 FOR NEXT DAY DELIVERY of ALL HOT WATER HEATING UNIT MODELS INCLUDING 48-58kW UNITS- 

SAVINGS OF

20% REDUCTION of opex cost,

30% REDUCTION of initial cost

15%     REDUCTION in carbon

75%    REDUCTION of space

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