Fitch raises 2026 oil price forecast amid Strait of Hormuz tensions

Global credit ratings agency Fitch Ratings has increased its forecast for average crude oil prices in 2026, citing rising geopolitical tensions and potential disruptions to global energy supply routes.

In its latest report, the UK-based firm revised its annual average forecast for Brent crude to $70 per barrel, up from its earlier projection of $63 per barrel.

According to the agency, the adjustment reflects the assumption that the Strait of Hormuz could remain effectively closed for about one month due to escalating security threats in the region.

Despite the upward revision, Fitch expects oil prices to moderate later in the year. The agency projects that crude prices could fall to the mid-$60 range during the second half of 2026 as supply conditions gradually stabilise.

“We raised our 2026 annual average oil price forecast to US$70 a barrel from US$63 (Brent). This assumes that the Strait of Hormuz remains effectively closed for about a month, but oil prices then fall to the mid-US$60s by the second half of the year,” the firm said in its report.

Fitch noted that the updated oil price projection is not expected to significantly alter its baseline global economic outlook. However, the agency warned that a more severe scenario—where oil prices climb to $100 per barrel and remain elevated—could trigger substantial economic consequences worldwide.

According to the agency’s analysis, such a scenario could lead to a global supply shock, potentially reducing world gross domestic product by about 0.4 percent within four quarters. It could also increase inflation by 1.2 to 1.5 percentage points in major economies, including Europe and the United States.

Meanwhile, global oil markets remain volatile as geopolitical tensions continue to disrupt energy supply routes. On Thursday, March 12, oil prices retreated slightly after briefly touching the $100 per barrel mark earlier in the day.

Brent crude futures for May 2026 delivery were trading nearly 4 percent higher at $95.62 per barrel around 8:05 a.m. London time. At the same time, West Texas Intermediate futures for April delivery rose 3.5 percent to $90.32 per barrel.

The fluctuations come amid reports that three foreign cargo ships were struck overnight near the coasts of Iraq and the United Arab Emirates, marking the latest in a series of incidents occurring in or near the Strait of Hormuz—one of the world’s most critical shipping lanes for energy supplies.