North Sea oil has always been deeply political, from the Scottish independence debate to Margaret Thatcher’s use of revenues. But in 2025–2026, the political temperature around the basin has reached a new high, driven by a collision of climate policy, energy security fears, international pressure and soaring prices triggered by conflict in the Middle East.
The Labour government’s decision to ban new exploration licences has become the most contentious energy policy in a generation. In its 2024 general election manifesto, Labour committed to not issuing new licences to explore new oil and gas fields, arguing they would not reduce energy bills, would not deliver energy security, and would worsen the climate crisis.
Energy Secretary Ed Miliband has been the driving force behind the policy, championing a rapid transition to renewable energy with the goal of making Britain a “clean energy superpower” by 2030. In May 2026, the Energy Independence Bill was announced in the King’s Speech, formally enshrining the licensing ban in statute law. Existing fields continue to operate under their current licences, and the government has permitted some additional “tieback” drilling at existing fields, but no new exploration will be allowed.
“After the second fossil fuel crisis in half a decade, our clean power mission is the only way to bring down bills for good and take back control of our energy.” — Ed Miliband, Energy Secretary
US President Donald Trump has made Britain’s North Sea policy a recurring target. In April 2026, amid a global energy price spike caused by the US–Iran conflict and disruptions to the Strait of Hormuz, Trump posted on Truth Social criticising the UK’s refusal to expand drilling.
Trump described the UK’s approach as “tragic” and “absolutely crazy”, calling the North Sea “one of the greatest fields in the world” and urging Britain to “drill, baby, drill”. He also claimed that Aberdeen should be “booming” and criticised Norway for selling its North Sea oil to the UK at premium prices. Trump reportedly “harassed” Prime Minister Keir Starmer about North Sea oil during a 2025 state visit, later saying it was all Starmer heard for three days.
The US Ambassador to the UK has also publicly urged Britain to make more of its reserves, adding a diplomatic dimension to the domestic debate.
Both the Conservative Party and Reform UK have pledged to reverse the licensing ban if they enter government. Shadow Energy Secretary Claire Coutinho accused Miliband of being “utterly deluded”, arguing the policy increases reliance on foreign imports rather than building energy independence. The Conservatives have called for the approval of applications for the Rosebank field (Britain’s largest untapped oil field) and the Jackdaw gas field, both of which have been paused following legal challenges on climate grounds.
Industry body Offshore Energies UK has warned that the combined impact of the licensing ban and the 78% tax rate puts at risk 35,000 jobs and could reduce investment from £14 billion to £2 billion. Several major operators, including TotalEnergies and BP, have signalled a scaling back of their North Sea operations or divestments from the basin.
The debate has been supercharged by the disruption to global energy supplies caused by the Iran conflict, which led to partial closure of the Strait of Hormuz – a chokepoint carrying more than 20% of the world’s crude oil. Energy bills in the UK have risen sharply, with Brent crude and European gas prices both climbing more than 30% since the escalation.
The Counter-Argument: Proponents of the ban point out that oil prices are set on global markets. The UK exports much of the crude it produces because domestic refineries need different grades. Increasing production would not necessarily lower UK consumer prices. As one expert at the University of Bristol noted: the oil extracted from the UKCS is not owned by the British public – it is owned by private companies like Shell, BP and ExxonMobil, who sell it at world market prices.
The 78% headline tax rate on North Sea profits has become a major flashpoint. The Energy Profits Levy was introduced by the Conservatives in 2022 as a temporary windfall tax, but has been extended and increased by both governments. The Taxpayers’ Alliance and industry groups argue it is driving investment away and accelerating decommissioning. Environmental groups and the government counter that the industry enjoyed extraordinary profits during the energy crisis and should contribute fairly.
The OBR forecasts that total North Sea tax receipts will decline from £4.5 billion in 2024/25 to just £0.1 billion by 2030/31, as production continues to fall and the EPL reaches its scheduled expiry date of March 2030.
The comparison with Norway is frequently invoked in political debate. Norway created a state-owned oil company (Statoil, now Equinor) in 1972 and established a sovereign wealth fund in 1990 to invest oil revenues for future generations. That fund is now worth over $1.6 trillion and is the world’s largest. Norway has also recently reopened three gasfields that had been shut for decades to address the global supply shock.
Britain, by contrast, never created a sovereign wealth fund. Cumulative UK tax revenue from North Sea production is estimated at approaching £200 billion since the 1970s – a substantial sum, but one that was spent on current government expenditure rather than invested for the future.