Fitch Holds $87 Brent Base Case for 2026 on Assumption Strait of Hormuz Reopens by End-July

As markets rallied on hopes of a US-Iran peace deal, Fitch Ratings reaffirmed a measured base-case view that anchors much of the energy and insurance industry's 2026 planning: Brent crude will average approximately $87 a barrel across the full year. That assumption is built on the expectation that the Strait of Hormuz — effectively blockaded since the war began in late February — will reopen around the end of July, implying a roughly five-month closure of the waterway through which about one-fifth of the world's traded oil and liquefied natural gas flows.

The oil price trajectory for the remainder of 2026 hinges almost entirely on the timing of that reopening. From around $70 a barrel before the war in February, Brent surged nearly 79% to around $125 at the height of the conflict's disruptions before retreating below $100 and then toward $87 on peace-deal optimism. Analysts at Mirae Asset Sharekhan noted that progress on regional de-escalation, the reopening of key export routes, and the return of Gulf barrels are easing supply concerns. If a deal is signed and implemented, some analysts see Brent heading toward $70, with the forward curve already trending lower toward around $79 by 2027.

The US Energy Information Administration, however, has maintained a more elevated near-term projection of around $105 a barrel for June–July, explicitly contingent on continued disruptions through Hormuz. This gap between the bullish near-term EIA view and the more optimistic deal-driven scenarios captures the fundamental uncertainty: a signed agreement could rapidly deflate the war-risk premium embedded in crude, but the physical reality of restarting blockaded shipping, bringing refineries back online, and rerouting global energy flows will take months regardless of diplomatic progress.

For insurers, oil prices are a critical input across multiple dimensions. Elevated energy costs feed directly into claims inflation for property and casualty lines through higher repair, reconstruction, and transportation costs. Energy and marine specialty insurers face direct exposure to the conflict zone. And the broader inflationary impulse from high oil prices has kept central banks restrictive, shaping the interest rate environment that determines insurer investment yields and liability pricing. A sustained move back toward $70 Brent would be a significant disinflationary tailwind across the global economy.