Photo courtesy of Anadolu
Fitch Ratings said Wednesday that the recent closure of the Strait of Hormuz is expected to be temporary and will have a limited effect on global oil prices.
The agency noted that a global oil surplus provides a buffer against geopolitical tensions, helping to prevent major spikes in energy costs despite the disruption at the strategic waterway.
“Existing oversupply in the oil market reduces the risk premium typically associated with supply interruptions,” Fitch said in its report.
The rating firm predicted the conflict affecting the region will last less than a month, assuming interruptions to shipping and energy infrastructure remain brief.
The Strait of Hormuz handles roughly 20 million barrels of oil and refined products daily, accounting for about 20 percent of global supply, making it a vital route for energy trade.
Brent crude prices surged more than 10 percent last week, briefly topping $80 per barrel. Fitch expects prices to stabilize as alternative shipping routes and high inventories help cushion the supply shock.
The report warned that while countries like Saudi Arabia and Türkiye can offset supply gaps, others such as Iraq, Kuwait, and Qatar may feel more immediate effects due to their reliance on the strait.
Fitch added that an extended conflict could influence sovereign ratings in the Middle East, particularly for Israel and the UAE, while higher prices may benefit upstream producers in Australia and Malaysia but pressure downstream sectors like chemicals and fertilizers.