The Brent oil price could average $120/bbl in 2026 if the Strait of Hormuz remains effectively closed for six months, or $100/bbl if closed for three months, Fitch Ratings (Fitch) says in a new report. This compares to the 2026 average of $70/bbl in Fitch's base case.
The report, titled “Global Oil: Potential Price Impacts if Hormuz Effective Closure Prolonged”, said, “Under a three-month closure, we would expect an average Brent price of $100/bbl in 2026, with a spike to a $130/bbl average for the duration of the closure, before declining to around $90/bbl by year-end. Under a six-month closure, we would expect an average Brent price of $120/bbl in 2026, with a spike to a $130-170/bbl average for the duration of the closure, falling to $90/bbl by year-end.
“Our base-case average Brent oil price of $70/bbl in 2026 incorporates a spike to $100/bbl on average for March, $90/bbl on average for 2Q26, and drop to around $60/bbl by year-end. Our pre-war 2026 average forecast was $63/bbl, reflecting an oversupplied market.”
Fitch says that it assumes no demand destruction in its base case of the temporary Hormuz closure as current supply, along with the IEA’s (International Energy Agency) announced release of 400m bbl from reserves, is more than sufficient to meet demand.
The report also said, “We assume demand destruction of about 2.5% and 5.5% in our three- and six-month cases, respectively. In both these cases, we also assume a further release of oil reserves or a supply response, otherwise greater demand destruction would be required to balance the market.”
In all three cases, Fitch assumes the Strait closure incurs a loss of 15m barrels per day (MMbpd) in oil transit volumes, although very small volumes continue to transit the strait.
“Regardless, oil prices will remain highly volatile. The geopolitical risk premium is substantial, and there is high uncertainty over the duration of the conflict, strait closure and oil transit disruption,” Fitch added.