At a time when West Asia conflict spiking prices of global oil and natural gas, the rating agency - Fitch Ratings has said that the $63 per barrel (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. It noted that 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.

The Strait of Hormuz is a narrow 33-kilometre passage connecting the Persian Gulf to the Arabian Sea, and 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. Fitch highlighted that oil exports from Saudi Arabia and the UAE accounts for around half of the oil volumes transported through the strait, with the remainder from Iraq, Kuwait and Iran, and around half of these exports go to China and India.

It expects the global oil market to remain over supplied in 2026. It emphasized that any potential supply disruption would be offset by global market oversupply. It pointed that the global supply growth exceeded demand growth in 2025 with supply increasing by around 3MMbpd against below 1MMbpd demand growth. Besides, Iran accounts only for about 3.5% of global crude oil production, producing about 3.5 MMbpd and exporting about 2 MMbpd. However, it noted that the duration and intensity of the increasingly regional conflict remain uncertain, and oil price volatility would rise if there were to be any material disruption to Iranian oil production.