Fitch to revise 2026 oil forecast to reflect geopolitical risk premium

The international ratings agency Fitch Ratings forecasts that the average price of a barrel of oil will be around $70 in 2026, said Angelina Valavina, Managing Director and Head of the Natural Resources & Commodities team in EMEA Corporates at Fitch Ratings, Report informs.

She emphasized that high volatility and cyclicality are characteristic features of oil and gas markets and are nothing new.

"Nevertheless, the market is currently priced in a very significant geopolitical risk premium. At the beginning of this year, the price of a barrel of Brent was around $60. Yesterday, it briefly jumped to approximately $120, after which it fell below $100.

Currently, the price of Brent is around $90 per barrel. Therefore, price fluctuations remain extremely high – there is no doubt about that," Valavina noted.

She noted that, based on the agency's assumption that the Strait of Hormuz's closure is temporary, Fitch believes that once the strait resumes operations and oil flows through it, prices will decline and return to levels determined by the balance of supply and demand.

"At the same time, the global oil market is currently characterized by excess supply. Therefore, our December forecast assumed an average Brent price of $63 per barrel in 2026. Clearly, this estimate is subject to upward revision. While our updated price forecast has not yet been published, we estimate that the average price for 2026 could be around $70. This figure takes into account the current surge in prices and the subsequent decline, which we expect to occur once this trade route is restored," she explained.

Valavina also noted that, according to Fitch estimates, supply growth will significantly outpace demand growth this year: global supply will increase by approximately 2.5 million barrels per day, while demand growth will be less than one million barrels per day. Consequently, the market remains in surplus, she added.