Fitch's May oil and gas price upgrade still splits sector outlooks
The rating agency raised its Brent and European gas assumptions in May, citing a longer Strait of Hormuz closure, and the effects are still working through insurers and steelmakers.
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Chart: USO, a fund that tracks crude, one-minute prices, two sessions
Fitch Ratings raised its near-term oil and European gas price assumptions in May 2026, according to Fitch Ratings, pointing to a longer-than-expected closure of the Strait of Hormuz during the Iran conflict. The agency assumed the strait would begin reopening around July.
Fitch lifted its average 2026 Brent assumption to $87 a barrel from $68 last year, based on an assumed five-month closure of the strait through the end of July, up from a one-to-two month closure assumed previously, bne IntelliNews reported. Its WTI assumption rose to $80 a barrel from $65, Investment Executive reported. Fitch also raised its Title Transfer Facility gas assumption to $14 per thousand cubic feet for 2026 from about $12 in 2025, citing disruption to Qatari LNG flows through the strait, according to bne IntelliNews. Following the changes, Fitch upgraded its 2026 outlook for the global oil and gas sector to improving from neutral, the agency's EMEA head of natural resources and commodities, Angelina Valavina, told bne IntelliNews.
Fitch has adjusted these price assumptions before, including cuts in January 2016 and increases in July 2016 and in a 2024 revision tied to OPEC supply dynamics.
The higher assumptions support reinsurance earnings that have been under pressure from catastrophe losses, but they do little to offset weaker steel demand in China. For insurers exposed to energy-linked reinsurance lines, the May revision is a modest tailwind. For companies tied to Chinese steel demand, it remains a headwind.