Fitch expects oil price spike to fade

June 08, 2026 (MLN): Fitch Ratings expects oil prices to fall sharply after the Strait of Hormuz reopens, arguing that the current surge reflects a temporary logistical supply shock rather than a lasting loss of production capacity.

The agency forecasts the global oil market will return to oversupply in the fourth quarter of 2026, driven by a rapid recovery in Middle East production, strong non-OPEC supply growth and potentially higher OPEC output.

In a new report, Fitch said its base-case forecast of Brent crude averaging $87 per barrel in 2026 assumes the Strait of Hormuz reopens by the end of July, resulting in an effective five-month closure.

However, the ratings agency noted that uncertainty remains high regarding the timing of the reopening, making oil price risks highly binary.

Fitch expects Brent prices to retreat sharply from elevated levels seen between March and July once shipping through the strait resumes.

The agency said the current price spike stems from supply disruptions to oil transportation rather than permanent damage to production capacity.

The report projects the oil market will shift back into surplus from September 2026, citing limited damage to regional oil infrastructure, a swift rebound in Middle Eastern output, robust non-OPEC production growth and the possibility of OPEC raising output beyond pre-conflict quotas.

Fitch estimates global oil supply will average about 2.9 million barrels per day (bpd) lower in 2026 than in 2025, based on a five-month closure of the Strait of Hormuz and excluding releases from strategic petroleum reserves.

Despite this, the agency expects oversupply to re-emerge quickly after the waterway reopens.

According to Fitch, the market could face an oversupply of around 4 million bpd in the fourth quarter of 2026, depending on OPEC policy decisions.

The resulting supply overhang is expected to weigh on prices, with global oil supply projected to exceed demand on average across 2026.

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