UK small businesses have just had another reminder that global energy shocks do not stay global for long. The latest warning came from Centrica chief executive Chris O’Shea, who told the BBC that if oil prices stay high, rising energy bills are effectively unavoidable later in the year.
For SMEs, the immediate issue is not just what happens to household bills in July. It is the wider running-cost picture. If oil stays elevated, many small firms are likely to feel it first through fuel, deliveries and supplier costs, with energy contracts and customer spending close behind.
What has happened
According to the BBC, crude oil has risen by about 45% to around $106 a barrel since the conflict involving Iran escalated and shipping through the Strait of Hormuz was badly disrupted. O’Shea said the effect should be bigger at the petrol pump than on gas and electricity bills in the short term, but he also pointed to Cornwall Insight’s forecast that household energy bills in England, Scotland and Wales could rise by an average of £332 from July if wholesale conditions stay where they are.
A separate BBC report on petrol and diesel prices shows why small firms should pay attention now rather than later. Analysts told the BBC that every $10 increase in the oil price tends to add roughly 7p a litre at the pump. Since the conflict began, RAC data cited by the BBC shows average petrol prices rising by 9.8p to 142.62p a litre, while diesel has jumped by 20.3p to 162.66p. If oil stays around $100, the RAC says petrol could move towards 150p a litre and diesel could get close to 180p.
That matters because many SMEs cannot neatly separate transport costs from everything else. Builders, cleaners, caterers, mobile beauty businesses, couriers, market traders and local retailers all depend on vans, supplier deliveries or staff travel in some form. Even firms that use little fuel directly can still get hit when wholesalers, distributors and service providers pass higher costs through.
Why it matters for small businesses
The first pressure point is obvious: getting around becomes more expensive. A few extra pence per litre may not sound dramatic, but across several vehicles, repeated deliveries or daily call-outs it adds up quickly. Businesses already worried about fuel-duty uncertainty and running costs will not welcome another unpredictable swing in pump prices.
The second pressure point is energy. The current headlines are mainly about household bills, but that should still ring alarm bells for SMEs. Ofgem’s guidance for businesses makes clear that commercial customers face different contract choices and risks from households, which means the impact will not necessarily arrive in the same way or on the same timetable. For some firms the squeeze may appear when a fixed deal ends, when a broker comes back with worse renewal terms, or when a landlord rolls higher utility costs into service charges.
The third pressure point is demand. When households are paying more for petrol, heating and everyday essentials, they often become more cautious elsewhere. That can feed into quieter tables, postponed jobs, smaller baskets and more price-sensitive customers. We have already noted in our look at the flat UK economy that cautious spending can be as damaging as a direct cost rise.
What SMEs should do now
First, stress-test your numbers using today’s fuel price as the floor, not the ceiling. If your business depends on driving, deliveries or site visits, work out what another 5p, 10p or 15p a litre would do to margins. It is far better to know that now than to discover it halfway through a busy week.
Second, review energy arrangements before renewal dates sneak up on you. If you are on a commercial contract, check when it ends, what notice period applies and whether your usage profile has changed enough to justify shopping around early. Small firms often lose money simply because a tariff rollover or poorly timed renewal goes unnoticed.
Third, talk to suppliers sooner rather than later. If wholesalers or delivery partners are likely to add surcharges, ask how they are thinking about timing, thresholds and notice periods. That gives you a better chance of updating prices calmly instead of reacting in a rush.
Finally, be realistic about passing costs on. Some businesses can absorb short spikes; many cannot. But price changes land better when they are tied to a clear service offer, better scheduling or tighter stock control rather than looking like a panicked response to the news cycle.
The practical takeaway
Small businesses do not need to assume an immediate energy crisis to treat this seriously. The more useful lesson is that higher oil prices rarely stay confined to one headline or one bill. They spread through fuel, freight, utilities and customer behaviour. For SMEs, that means the smartest move now is not guesswork but preparation: check contracts, model the downside and protect cash flow before the next cost jump arrives.
Sources
- BBC News, British Gas boss says energy bills rise ‘inescapable’ if prices stay high, published 22 March 2026
- BBC News, How high could UK petrol and diesel prices go?, published 18 March 2026
- Ofgem, Energy advice for businesses
