Is it permissible for the questioner’s maternal uncle to spend usurious interest money—which he used to distribute to his brothers for filling up heating oil—on things other than heating purposes?

It is impermissible to engage in Riba (usury/interest), whether by depositing or borrowing. One must repent from it and withdraw funds from usurious banks, unless there is an extreme necessity for preserving money, in which case it may be kept only in a current account. It is impermissible to benefit from usurious interest; rather, one must dispose of it by spending it on charitable causes, such as giving it to the poor and needy. It is permissible to give it to relatives whose maintenance is not obligatory upon you, so that they may utilize it as they wish for permissible things.