Andy Burnham is set to become UK prime minister in July and will immediately face a defining choice over North Sea oil drilling versus renewables investment.
The pressure comes amid a global energy shock that has reignited fierce debate about Britain’s domestic production capacity and long-term energy security.
US President Donald Trump has already intervened, blaming outgoing Prime Minister Keir Starmer’s resignation on what he called a “failed” energy policy.
Trump’s comments land as conflict involving Iran has disrupted oil flows through the Strait of Hormuz, one of the world’s most critical oil supply chokepoints.
That disruption has sharpened the UK’s energy security debate, which was already raw following the economic shock triggered by Russia’s war in Ukraine.
Business leaders argue that domestic production is essential precisely because of these geopolitical vulnerabilities, making the case for expanded North Sea drilling.
The political fault lines within the Labour government itself are stark, with finance minister Rachel Reeves understood to privately support new drilling licences.
Energy Secretary Ed Miliband, who could replace Reeves as finance minister under a Burnham government, has consistently argued that clean energy should remain the central focus.
Two of the UK’s largest trade unions, Unite the Nation and GMB, are actively campaigning for new drilling, warning that blocking it would cost thousands of jobs in the sector.
At the heart of the dispute are the Rosebank and Jackdaw fields in Scottish waters, two major projects that could significantly boost UK supply but sit in direct tension with national climate commitments.
Scotland’s First Minister John Swinney told CNBC: “There is a changing balance that’s got to be struck.”
Swinney added: “We are going to have to utilize oil and gas for some years to come. If there is uncertainty about the security of supply, or security of supply is undermined because of exorbitant cost of the effects of the conflict in Iran, these are material factors that have got to be borne in mind.”
The closure of the Grangemouth oil refinery in April 2025 has made the stakes even more tangible, with Scotland’s once-largest refinery shutting with the loss of hundreds of jobs.
Swinney noted the refinery had been “a source of production of jet fuel, so we’re now importing jet fuel because of a closure of a refinery.”
He warned that “we’ve now got uncertainty over jet fuel because of the conflict in the Middle East, and that will affect the ability of our economy to function,” underlining the real-world consequences of the policy deadlock Burnham must now resolve.