Andy Burnham, the heir apparent to British Prime Minister Keir Starmer, could face an early test in whether to expand North Sea oil drilling or double down on renewable energy amid a global energy crisis.
US President Donald Trump poured gasoline on the debate, blaming Starmer’s resignation this month on a “failure” in energy policy.
President Trump’s intervention comes as the Iran war has disrupted the flow of oil through the Strait of Hormuz, one of the world’s most important oil chokepoints.
In the wake of Russia’s war in Ukraine, tight physical supplies have intensified debate over Britain’s energy security and independence.
Business leaders say this is why domestic production is so important.
However, political divisions remain.
Britain’s Chancellor of the Exchequer Rachel Reeves is thought to have informally supported new drilling.
But Energy Secretary Ed Miliband, who is likely to replace Mr Reeves as finance minister under the new government, has argued that the focus should instead be on clean energy.
Britain’s two biggest trade unions, Unite the Nation and the GMB, are campaigning for drilling, fearing that blocking it would have a negative impact on jobs in the sector.
Mr Burnham is due to become prime minister in July barring objections from his Labor colleagues, but the market reaction has forced him to clarify his position quickly.
At the center of the debate are the Rosebank and Jackdaw oil fields in Scottish waters, two major projects that could increase UK supplies but also test climate targets.
This has put pressure on Scotland, with First Minister John Swinney telling CNBC: “The balance has shifted and the balance has to shift.”
“We’re going to have to rely on oil and gas for years to come,” he told CNBC. “If there is uncertainty about the security of supply, or if security of supply is compromised by the prohibitive costs of the fallout from the Iran conflict, these are critical factors that need to be kept in mind.”
In a move symbolic of Britain’s energy transition, the Grangemouth refinery, once Scotland’s largest, will close in April 2025, with the loss of hundreds of jobs.
Swinney said the refinery “was a source of jet fuel production, but now that the refinery is closed, we are importing jet fuel.”
“There is increased uncertainty around jet fuel due to the Middle East conflict, which will impact economic functioning,” Shiwiny added.
