Fitch Ratings has warned that credit risks from the US-Iran conflict remain elevated despite the two-week ceasefire announced this week, saying the truce is “already under intense strain” and the outcome of any talks remains deeply uncertain.
In an assessment published Friday, the agency said severe stress scenarios for global energy markets appear less likely following the ceasefire announcement and high-level negotiations, but that its adverse scenario — benchmarked at Brent crude averaging about USD 130 per barrel in the second quarter and USD 100 across 2026 — remains the appropriate framework for assessing potential downgrades.
Fitch said a significant escalation of the war could drive oil prices above even those adverse-case averages by causing more severe damage to energy production in Iran and other Gulf states, though demand destruction at such levels would cap the upside.
The agency’s base case, set in March 2026, projects Brent at USD 70 per barrel assuming the Strait of Hormuz reopens and oil flows gradually normalise through the second half of the year. Fitch said the physical market remains reasonably well supplied and prices could return to pre-conflict levels faster than many expect.
However, the agency cautioned that substantial risks skew toward higher energy prices for longer, even if negotiations provide clarity. The Gulf situation remains volatile, negotiations will be “extremely complex,” and the long-term effects on regional security and the business environment are difficult to assess at this stage.
For energy-importing economies like Sri Lanka — which faces both the Hormuz supply disruption and a 53% electricity tariff hike request — the Fitch assessment underscores that fuel import cost uncertainty will persist well beyond the ceasefire window.
