Fitch: Temporary Strait Closure Won't Sustain High Oil Prices

Fitch Ratings has maintained its forecast for an average Brent crude price of $63/bbl in 2026, anticipating that any closure of the Strait of Hormuz will be temporary. The agency cited the increasing avoidance of the vital shipping lane due to attack risks, leading to the halt of some oil major shipments and cancellation of insurance coverage.

However, Fitch expects that global oil market oversupply will act as a significant limiter on oil price rises. This oversupply, with global supply growth exceeding demand growth in 2025 and projected to continue in 2026, should mitigate potential disruptions to Iranian oil supply. Iran's oil production, while significant, represents only a small fraction of global output.

A prolonged closure of the Strait, which previously handled approximately 20 million barrels per day of oil transit, would impact both exporting and importing nations. Fitch indicated that naval protection for tankers, similar to measures taken during the 1980s Iran-Iraq war, could be considered if the closure became protracted. The agency noted that any material disruption to the region's oil infrastructure could lead to a more substantial increase in its 2026 oil price assumption.