Oil prices may average at around $87 per barrel in 2026 as the reopening of Strait of Hormuz in the coming months would ease crude supplies globally, says Fitch Ratings. Global oil markets are likely to move back into surplus once shipping through the Strait of Hormuz resumes, despite the sharp rise in prices caused by the closure of the key maritime route, the report says.“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 says.The ratings agency said the disruption has resulted in a temporary supply bottleneck driven by logistics issues rather than 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 Ratings said.Under its base-case scenario, Fitch expects the Strait of Hormuz to reopen by the end of July, implying a closure period of about five months. Based on this assumption, the agency forecasts an average Brent crude price of $87 per barrel in 2026.Also Read | Hormuz crisis fallout: How Indian refiners are adjusting to new crude oil mix to maximise output
Why Strait of Hormuz is important
The Strait of Hormuz remains one of the most important energy transit routes globally, carrying a significant portion of worldwide oil exports.
Any interruption to traffic through the strait has major consequences for global energy markets and the broader economy. Before the conflict, roughly half of the oil transported through the Strait of Hormuz originated from Saudi Arabia and the UAE. The remaining volumes were exported by Iraq, Kuwait and Iran. China and India together accounted for around half of the destination demand for these shipments.Fitch said the recent surge in oil prices reflects a short-term logistical disruption rather than a lasting loss of production capacity, and expects Brent crude to retreat sharply once normal shipping operations resume.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 and the possibility of OPEC raising output beyond pre-conflict production levels.
No major infrastructure damage
There has been no significant damage to oil infrastructure so far. Past experience also indicates that restoration work can be completed relatively quickly, the report says. 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, given the limited impact on regional oil infrastructure to date. 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.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.
