GUWAHATI: A rapid recovery in crude oil production across West Asia, combined with strong output growth from non-OPEC producers and the possibility of a more aggressive production strategy by OPEC, is expected to push the global oil market back into oversupply in the latter part of 2026 once the Strait of Hormuz reopens, according to a recent report by Fitch Ratings.
ALSO READ: At Least Three Dead After 7.8 Magnitude Earthquake Strikes Southern Philippines
The ratings agency said oil prices are likely to decline significantly after the strategic waterway resumes normal operations.
According to Fitch, the closure of the Strait of Hormuz created a temporary logistical supply shock but did not fundamentally change the long-term direction of the oil market.
“The current price spike reflects a temporary logistical supply shock rather than a lasting loss of production capacity,” Fitch said in its report.
The agency assumes that the Strait of Hormuz will reopen by the end of July and expects Brent crude prices to fall sharply from the elevated levels seen between March and July.
Fitch projects that the global oil market will return to oversupply from September 2026, with supply expected to exceed demand on average throughout the year.
“We expect the market to revert to surplus quite quickly after the reopening of the strait. This will create an overhang in the market and push oil prices down,” the report noted.
The agency added that recovering production in West Asia, alongside continued growth from non-OPEC producers, is likely to outweigh demand growth, reinforcing downward pressure on crude prices in the months following the reopening of the key shipping route.