The recent surge in oil prices following the closure of the Strait of Hormuz is a temporary supply bottleneck rather than a lasting disruption, according to Fitch Ratings. The agency forecasts Brent crude to average $87 per barrel in 2026, with markets returning to surplus once normal shipping resumes.
Fitch Base Case: Reopening by End of July
Under its base-case scenario, Fitch expects the Strait of Hormuz to reopen by the end of July 2026, implying a closure period of about five months. Based on this assumption, the agency projects an average Brent price of $87 per barrel for 2026.
"Oil prices will be lower if Hormuz reopens earlier. Uncertainty remains high regarding the timing of Hormuz reopening, and oil prices will remain volatile as a result," Fitch Ratings said.
The agency emphasised that the disruption has created a temporary supply bottleneck driven by logistics issues, not a permanent reduction in oil production. "The disruption does not alter the longer-term direction of the market, which is expected to return to surplus conditions later this year," Fitch stated.
Supply-Side Dynamics: No Major Infrastructure Damage
Fitch noted that no significant damage to oil infrastructure has occurred so far. Past experience shows restoration can be swift: following the 2019 attacks on its facilities, Saudi Aramco was able to carry out repairs and resume operations within roughly two weeks.
Production across the Middle East is expected to rebound rapidly. When shipping resumes, oil already held in tankers and onshore storage facilities is likely to reach the market first, followed by the restoration of previously curtailed output. The agency projects that global oil markets will return to an oversupplied state from September onward.
This outlook is supported by:
- A rapid recovery in West Asian oil production
- Robust supply growth from non-OPEC producers
- The possibility of OPEC raising output beyond pre-conflict production levels
Demand-Side Impact: Asia Bears the Brunt
Before the conflict, Asia accounted for 91% of the crude oil transported through the Strait of Hormuz, with China receiving 32% and India 15%. As a result, Asian markets have borne the brunt of the petrochemical sector's response to the disruption.
| Aspect | Details |
|---|---|
| Share of oil from Saudi Arabia and UAE before conflict | Roughly half of Hormuz shipments |
| Other exporters | Iraq, Kuwait, Iran |
| Top destination countries | China and India combined ≈ half of demand |
| Estimated closure period | About five months (end of July) |
| 2026 average Brent price forecast | $87 per barrel |
Price Outlook and Key Upcoming Data
Fitch said the recent surge in oil prices reflects a short-term logistical disruption. Once normal shipping operations resume, Brent crude is expected to retreat sharply. The agency's base case assumes reopening by end of July, but if the strait reopens earlier, prices could fall faster. Conversely, any delay would prolong volatility.
Key factors to monitor include:
- Actual timing of the Strait of Hormuz reopening
- Recovery pace of Middle Eastern production
- OPEC+ output decisions in the second half of 2026
- Weekly US EIA inventory data for signs of supply tightness
For commodity traders and procurement teams, the message is clear: the current price spike is likely transient, and positioning for a return to surplus from September may offer opportunities. However, uncertainty remains high, and volatility is expected to persist until the strait fully reopens.
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