U.K. Energy Profits Levy Harms National Energy Security, Will Lead to More Job Losses, Harbour Energy CEO Says

By Adam Whittaker

The U.K.'s windfall tax on energy profits is hurting investment across the country's oil-and-gas sector, leading to lower domestic production and increased reliance on imports at a time when supply shocks are roiling global energy markets, Harbour Energy Chief Executive Linda Cook said.

The tax was introduced in May 2022 to capture the higher profits triggered by a rise in energy prices as a result of Russia's invasion of Ukraine. It levies an additional 38% on the profits of oil-and-gas companies operating in the U.K. or on its continental shelf.

The tax is leading to lower domestic production and higher dependence on imports of energy, damaging the country's energy security at an inopportune time, Cook said. Analysts agree that prolonged conflict in the Middle East will cause significant disruption to global energy supplies and send prices higher.

Harbour Energy has already cut 700 jobs since the levy was introduced and Cook said Thursday that more will follow if the levy continues to limit investment.

Lengthier disruptions and damage to oil-production facilities would likely mean Brent crude reaches $100 a barrel, Goldman Sachs analysts wrote in a note after conflict between Iran and the U.S. and Israel escalated over the weekend. Brent crude currently trades at $82.87 a barrel.

Roughly 20% of the world's oil and liquefied natural gas passes through the Iran-controlled Strait of Hormuz every day, and those supplies are effectively trapped as tanker traffic through the waterway comes to a halt. Gas-storage levels across Europe are below historic levels and will need to be refilled before next winter, increasing the competition for energy supplies.

The latest supply disruption comes on the heels of Russia's invasion of Ukraine, which upended global energy flows and left countries scrambling to find alternative energy sources.

Ending the energy-profits levy would enable the U.K. to once again leverage its own natural resources, Cook said.

Harbour said it has paused over 2 billion pounds ($2.67 billion) of investment in U.K. projects because the levy makes them uncompetitive comparable to other jurisdictions. In February, it completed a $3.2 billion acquisition for LLOG Exploration in the U.S., where the tax rate is much lower at around 23%. This compares with 78% in the U.K.

Without additional investments, U.K. production will continue to decline and jobs will disappear, Cook added. However, Harbour shares the government's desire to increase investment and jobs, she added. The company anticipates continued opportunities to work with the government to find a way to end the levy.

Write to Adam Whittaker at adam.whittaker@wsj.com

(END) Dow Jones Newswires

March 05, 2026 06:22 ET (11:22 GMT)