UK cancels early termination of North Sea windfall tax plan as Iran conflict drives up oil prices

2026-03-05 03:44:05

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Investing.com – UK Chancellor of the Exchequer Rishi Sunak has abandoned plans to prematurely end the North Sea oil and gas windfall tax, following a surge in oil prices caused by the Iran conflict.

According to a government official who requested anonymity, Sunak initially planned to announce the termination of the tax this week, which was set to expire in March 2030. The official said rising oil prices forced her to shelve the proposal.

For months, ministers have been meeting with industry representatives to assess the impact of ending the windfall tax before its 2030 expiration date. On Wednesday afternoon, Sunak met with representatives from the oil and gas industry, including BP, Adura, and the UK Offshore Energy Association.

The tax was introduced by the previous Conservative government after Russia’s invasion of Ukraine, when energy prices soared. Although prices have since fallen, the tax has been extended and increased multiple times, bringing the nominal tax rate for the industry to 78%. The UK Offshore Energy Association has been calling for adjustments to the tax.

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