The USD 63/bbl estimation for average Brent crude price for 2026 is unlikely to see any significant upside as the Strait of Hormuz closure would be only temporary and global oil market oversupply should limit oil price rises, Fitch Ratings said.
Fitch said the strait is not formally closed but vessels are increasingly avoiding it given the risk of attack by Iran or its proxies. Oil majors have halted shipments for safety reasons, and insurers are cancelling war risk cover for vessels.
"We do not expect significant upside to our December 2025 assumption of an average Brent oil price of USD63/bbl for 2026," Fitch said, adding it expects this effective closure of the strait to be temporary.
2 March 2026
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Also, global oil market oversupply, should limit oil price rises and mitigate any potential disruptions to Iranian oil supply, it added.
Brent crude prices have already risen to USD 82-84 per barrel from an average of USD 66-67 in January-February 2026.
The US and Israel jointly launched military strikes on Iran on February 28. Iran responded by firing drones and missiles at Israel and US military installations around the Gulf, and also at the global business hub of Dubai.
The Strait of Hormuz is a vital artery for seaborne oil transportation, with limited alternative routes. The crisis in West Asia has led to spiralling prices of global oil and natural gas. The Strait is a narrow 33-kilometre passage connecting the Persian Gulf to the Arabian Sea.
Fitch said prior to the conflict, around 20 million barrels per day (MMbpd) of crude oil and petroleum products transited the strait, accounting for about a quarter of global seaborne oil trade and a fifth of global oil consumption.
About half of the oil volumes transported through the strait are exports from Saudi Arabia and the UAE, with the remainder from Iraq, Kuwait and Iran. About half of these exports go to China and India.
"A protracted closure would affect both exporting and importing countries and therefore is not our baseline assumption. If the strait were to remain effectively closed for a protracted period, naval protection for tanker navigation could be considered, as occurred during the 1980s Iran–Iraq war," Fitch said.
In addition, the global oil market is oversupplied, which should limit the geopolitical risk premium and cap risks to oil price increases, Fitch said.
Global supply growth exceeded demand growth in 2025. Fitch expects this trend to continue in 2026. Supply increased by about 3MMbpd in 2025, while demand grew by well below 1MMbpd, Fitch added.
While Iran is a sizeable oil producer, producing about 3.5 MMbpd and exporting about 2 MMbpd, it accounts only for about 3.5 per cent of global crude oil production.
Fitch said any potential supply disruption would be offset by global market oversupply.
However, the duration and intensity of the increasingly regional conflict remain uncertain, Fitch said, adding oil price volatility would rise if there were to be any material disruption to Iranian oil production.
"Any protracted blockage of the strait or material and sustained damage to the region’s oil and gas production and transportation infrastructure would materially affect oil markets and likely result in a more material rise in our base case 2026 oil price assumption," Fitch said.
