Turmoil in West Asia: Oil Prices and the Strait of Hormuz Crisis

Fitch Ratings maintains that the 2026 average Brent crude price is unlikely to surpass USD 63 per barrel despite the temporary closure of the Strait of Hormuz. The strait, although not formally shut down, is seeing fewer vessels due to potential threats from Iran.

Major oil companies are pausing shipments for safety reasons, and insurers have canceled war risk insurance on vessels. Fitch emphasizes that the strait's effective closure is expected to be short-lived, with global oil oversupply cushioning potential disruptions in Iranian oil supply.

The US and Israel have launched strikes on Iran, whose counterattacks have inflated oil and gas prices. The ongoing conflict and potential protracted closure of the strait could cause substantial oil market turmoil and further price hikes, cautions Fitch.