• Fitch Ratings has upgraded its global oil and gas sector outlook to improving, citing elevated near-term prices.
  • Brent crude is expected to average $100-$110 per barrel from May to July 2026 due to the Strait of Hormuz disruption.
  • Prices are forecast to ease to around $70 per barrel by September, assuming a rapid production rebound after the strait reopens.

Sector Outlook Brightens

Fitch Ratings revised its global oil and gas sector outlook to improving from neutral, driven by higher near-term oil prices and a potential supply rebound. The rating agency expects Brent crude to hold at $100-$110 per barrel during the second quarter of 2026, as the ongoing disruption in the Strait of Hormuz keeps geopolitical risk premiums elevated. The strait is assumed to reopen around the end of July, after which prices could ease to approximately $70 per barrel by September, according to Fitch's baseline scenario.

"The revision reflects our expectation that the temporary supply disruption will push prices higher in the near term, but a rapid normalization of production will bring them back toward fundamentals," a Fitch analyst said. The agency noted that no material damage to oil infrastructure has been reported, supporting a quick recovery.

Market Dynamics and Risks

Fitch's updated outlook comes amid heightened volatility in oil markets. The Hormuz disruption has added a $5-$10 risk premium to Brent, but ample inventories and disciplined capital expenditure by producers are expected to buffer the impact. The agency's baseline assumes that once the strait reopens, the market could shift back to oversupply in late 2026, pressuring prices.

However, Fitch highlighted a binary risk: if the disruption persists beyond July, prices could remain elevated for longer. Conversely, a faster-than-expected resolution could accelerate the decline. The agency maintained a neutral view on the broader sector for 2026, citing strong balance sheets and a focus on short-cycle oil and LNG projects.

Attempts to reach Fitch for further comment were unsuccessful.

Implications for Investors

The higher near-term prices could boost cash flows for exploration and production companies, but the anticipated normalization later in the year suggests caution. Energy-intensive sectors may face higher input costs in the short term, while refiners could see margin volatility. Fitch's revised outlook underscores the importance of monitoring geopolitical developments in the Middle East.

Correction: A previous version of this article misstated the expected timing of the price easing. The correct timeframe is September 2026.