A. SREENIVASA REDDY (ABU DHABI)
Middle Eastern issuers did not suffer any ratings downgrades despite ongoing disruptions to supply chains caused by the closure of the Strait of Hormuz, Fitch Ratings said in a report.
The rating agency said the Iran war and the closure of the Strait of Hormuz have affected economic activity across the region, but negative rating actions for Middle East issuers in March and April were limited to Outlook revisions and placements on Rating Watch.
Fitch said there have been no Middle East issuer downgrades since February-end, underlining the resilience of ratings across sectors despite heightened uncertainty and disruption.
However, the agency noted that it has placed several ratings on Rating Watch Negative and revised some Outlooks to Negative from Stable, or to Stable from Positive. These actions point to the persistence of significant risks linked to the war, Fitch said.
Fitch recently revised its 2026 base-case Brent oil price assumption to $87 per barrel. The revised assumption is based on the expectation that the Strait of Hormuz will begin reopening around July, extending the closure to about five months, compared with the one to two months expected earlier.
Under Fitch’s adverse scenario, oil prices average about $100 per barrel in 2026, with Hormuz not returning to near-normal flows until later in the third quarter of 2026 or possibly early in the fourth quarter.
The agency said this scenario highlights material risks to several sectors in the GCC, although hydrocarbon producers could see higher revenue and margins if they are not dependent on the Strait of Hormuz.
Fitch also noted that the ratings of 85% of GCC banks and many corporate government-related entities in the region rely on sovereign support. These ratings are therefore likely to move in tandem with the Issuer Default Ratings of the relevant sovereigns.