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Fitch Ratings has projected an average Brent crude oil price of USD 87 per barrel in 2026, while expecting prices to remain elevated at USD 100-110 per barrel during May-July before falling to USD 80 per barrel in August and around USD 70 per barrel from September onward.
In a report released on June 5, the global ratings agency said its base-case forecast assumes that the Strait of Hormuz reopens around the end of July following an effective five-month closure. "Accordingly, we assume Brent averages USD100-110/bbl in May-July, before falling to USD80/bbl in August and to about USD70/bbl from September, the level implied by the market fundamentals plus a residual geopolitical risk premium," Fitch said. The agency noted that the recent surge in oil prices reflects supply disruptions linked to the closure of the key shipping route rather than a permanent loss of production capacity. "The current price spike reflects a temporary logistical supply shock rather than a lasting loss of production capacity. Assuming the strait reopens around the end of July, we expect Brent to fall sharply from the elevated March-July levels," the report said. Fitch expects the global oil market to return to oversupply conditions from September 2026, supported by a recovery in Middle East production, strong non-OPEC supply growth and the possibility of increased OPEC output. According to the report, "We project the market to return to oversupply from September 2026 due to a lack of material damage to the regional oil infrastructure; rapid recovery in Middle East production; and strong non-OPEC supply growth and potential OPEC output increases up to a maximum production capacity." The agency added that uncertainty surrounding the reopening of the Strait of Hormuz remains a major factor influencing oil prices. "The risk is largely binary, but we view it as skewed to the downside. 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 said. The report highlighted that the closure of the Strait of Hormuz disrupted the transit of around 20 million barrels of oil equivalent per day, representing about one-fifth of global oil consumption. "The Hormuz blockade creates a logistical challenge, which once removed is likely to result in a quick drop in prices," it said. Fitch further stated that there has been "no material damage to the oil infrastructure so far," supporting expectations of a swift recovery in regional production once shipping routes reopen. Commenting on the outlook, Angelina Valavina, Managing Director at Fitch Ratings, said, "Oil price dynamics hinge on the timing of Hormuz reopening. Our assumed end-of-July reopening would push the market back into oversupply in 4Q26 and drive oil prices lower. The risk remains binary." The agency said weak market fundamentals are likely to reassert themselves once the geopolitical disruption eases, resulting in lower oil prices during the final months of 2026. (ANI)
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