Fitch Expects Temporary Closure of Strait of Hormuz With Limited Oil Price Impact
Oversupply may cushion market shock
Fitch Ratings stated on Wednesday that the recent closure of the Strait of Hormuz will likely be short-lived and may have only a limited effect on global oil prices.
According to the agency, the current oversupply in the global oil market provides a strong buffer against geopolitical tensions. As a result, the market may absorb supply disruptions without triggering major price spikes.
Furthermore, the report noted that excess supply helps reduce the geopolitical risk premium that usually pushes oil prices higher during major disruptions.
Conflict expected to remain short
The agency expects the ongoing regional conflict to last less than a month. Fitch assumes that disruptions to shipping routes and energy infrastructure will remain temporary.
Meanwhile, energy markets continue to monitor developments closely because the Strait of Hormuz plays a vital role in global energy trade.
Key route for global oil supply
Every day, nearly 20 million barrels of crude oil and refined petroleum products pass through the Strait of Hormuz. This volume represents about 20% of the world’s total oil supply.
Although Brent Crude Oil prices have climbed more than 10% over the past week to exceed $80 per barrel, Fitch expects prices to stabilize soon. Alternative shipping routes and large global inventories may help reduce supply pressure.
Different impacts across countries
The report also highlighted that some countries remain better prepared for disruptions. For example, Saudi Arabia and Türkiye have sufficient infrastructure and assets that can help offset supply challenges.
However, other energy exporters, including Iraq, Kuwait, and Qatar, may face greater short-term pressure because they depend heavily on this route for oil exports.
Possible rating risks if conflict expands
Fitch also warned that a prolonged conflict could affect sovereign credit ratings in the Middle East. The agency has already added negative qualitative factors to the rating models of countries such as Israel and the United Arab Emirates.
At the same time, upstream oil producers in countries like Australia and Malaysia may benefit from higher oil prices.
However, industries that rely heavily on oil-based raw materials—such as chemicals and fertilizers—could face lower profit margins as feedstock costs increase.
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