A cargo ship is pictured off coast city of Fujairah, in the Strait of Hormuz in the northern Emirate on February 25, 2026. (Photo by Giuseppe CACACE / AFP)
MANILA – The effective closure of the Strait of Hormuz following the outbreak of conflict between the US and Israel versus Iran is likely to be "temporary" with limited impact on global crude costs, Fitch Ratings said Friday.
While the vital waterway has seen a "de facto" shutdown as oil majors halt shipments and insurers cancel war risk cover, the ratings agency downplayed fears of a sustained price spike.
"The effective closure of the Strait of Hormuz... is likely to be temporary given its vital economic role," Fitch said in a commentary, adding that a global supply glut would help "mitigate any potential disruptions."
The Strait is a critical chokepoint, handling 20 million barrels per day—roughly a quarter of global seaborne oil trade. However, Fitch maintained its 2026 price forecast for Brent crude at an average of USD63 per barrel, noting the market remains heavily oversupplied.
The agency highlighted that global oil inventories reached 8.2 billion barrels at the end of 2025, a volume "sufficient to cover a halt in oil shipments via the Strait of Hormuz for over 400 days."
Furthermore, Saudi Arabia and the UAE possess pipelines capable of bypassing the Strait to reach the Red Sea and the Gulf of Oman, potentially softening the blow of the transit disruptions.
While Iran produces approximately 3.5 million barrels per day, Fitch noted this represents only 3.5 percent of global output. "Potential supply disruption would be offset by global market oversupply," the agency said, pointing to 4.3 million barrels of spare capacity held by OPEC+.
Fitch warned, however, that the "duration and intensity" of the regional conflict remains a wildcard. Any sustained damage to energy infrastructure or a "protracted blockage" could yet force a material revision of price assumptions and spark heightened volatility.