ISTANBUL

Fitch Ratings said Wednesday that the closure of the Strait of Hormuz is likely to be temporary and its impact on global oil prices will remain limited.

The rating agency stated that the global oil market oversupply serves as a buffer against geopolitical risks, capping potential price spikes despite the strategic waterway's effective closure.

Existing global oil market oversupply creates a buffer that would limit the geopolitical risk premium typically associated with supply disruption concerns, according to the report.

Fitch predicts the ongoing conflict in the region will last less than a month, assuming that disruptions to shipping and energy infrastructure will be brief.

The Strait of Hormuz is a critical passage for global energy trade, with approximately 20 million barrels of oil and refined products passing through daily, representing 20% of the world's supply.

While Brent crude rose over 10% to exceed $80 per barrel from last week so far; Fitch expects prices to stabilize as alternative routes and high inventory levels mitigate the supply shock.

The report highlighted that while Saudi Arabia and Türkiye have sufficient assets to provide a buffer, countries like Iraq, Kuwait, and Qatar face more direct near-term hits due to their reliance on the route.

Fitch also warned that an extended conflict could impact sovereign ratings in the Middle East, particularly for Israel and the UAE, where negative qualitative overlays have already been added to rating models.

Upstream producers in countries like Australia and Malaysia may benefit from higher prices, while downstream sectors such as chemicals and fertilizers face margin pressures due to rising feedstock costs.