Oil Prices Could Average $120 if Hormuz Closed for 6 Months -Fitch
The Brent oil price could average USD120 per barrel (bbl) in 2026 if the Strait of Hormuz remains effectively closed for six months, or USD100/bbl if closed for three months, Fitch Ratings says in a new report.
This compares to the 2026 average of USD70/bbl in Fitch Ratings’ base case. Under a three-month closure, Fitch analysts said they would expect an average Brent price of USD100/bbl in 2026, with a spike to USD130/bbl during the closure, before declining to around USD90/bbl by year-end.
Under a six-month closure, Fitch analysts would expect an average Brent price of USD120/bbl in 2026, with a spike to USD130-170/bbl during the closure, falling to USD90/bbl by year-end.
“Our base-case average Brent oil price of USD70/bbl in 2026 incorporates a spike to USD100/bbl on average for March, USD90/bbl on average for 2Q26 and a drop to around USD60/bbl by year-end. Our pre-war 2026 average forecast was USD63/bbl, reflecting an oversupplied market.
“We assume no demand destruction in our base case of the temporary Hormuz closure as current supply, along with the IEA’s announced release of 400 million bbl from reserves, is more than sufficient to meet demand.
“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, we assume the Strait closure incurs a loss of 15 million barrels per day (MMbpd) in oil transit volumes, although very small volumes continue to transit the strait.”.
Regardless, oil prices will remain highly volatile, Fitch Ratings said. The geopolitical risk premium is substantial, and there is high uncertainty about the duration of the conflict, Strait of Hormuz closure, and oil transit disruption. Transcorp Hotels Hits 52-Week High, Tops N2trn in Fresh Breakout
