Strait of Hormuz closure sends oil prices into temporary turmoil

Oil prices face short-term pressure as the closure of the Strait of Hormuz disrupts global supply. Fitch Ratings warns of a temporary logistical shock, cutting daily output by nearly 3 million barrels. However, the market is expected to recover swiftly once the key shipping route reopens. The Strait of Hormuz shutdown has slashed global oil supply by an average of 2.9 million barrels per day. Fitch predicts this disruption will push Brent crude prices higher in the coming months, peaking between March and July. The agency’s baseline forecast assumes the strait will reopen by late July, allowing prices to ease to around $87 per barrel by 2026.

Once the route reopens, a rapid rebound in Middle Eastern production and strong non-OPEC growth should flood the market. Fitch expects OPEC output to surpass pre-conflict quotas, deepening the surplus. By the fourth quarter of 2026, daily oversupply could reach nearly 4 million barrels.

The timing of the strait’s reopening remains unclear, leaving oil prices vulnerable to swings in either direction. Fitch maintains that, on average, global supply will outstrip demand throughout 2026, with the market returning to surplus by September. A return to oversupply is forecast from late 2026, driven by recovering Middle Eastern output and expanding non-OPEC production. Brent crude prices are set to drop sharply once the Strait of Hormuz reopens, though delays could prolong volatility. The agency’s outlook hinges on the strait’s reopening timeline, which remains uncertain.