The US-Iran war and effective closure of the Strait of Hormuz have disrupted economic activity, but the negative rating actions for Middle East issuers for the March-April period were limited to outlook revisions and placements on the Rating Watch, stated a new report from Fitch Ratings.
The Middle East has been subject to heightened uncertainty and disruption since end-February, due largely to the Iran war. There have been no Middle East issuer downgrades since end-February, but Fitch 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 around the war that, if crystallised, could lead to broader rating downgrades.
The effective closure of Hormuz has led to supply chain disruptions. These have been exacerbated by damage to Qatarâs LNG infrastructure and volatile funding conditions in the region, said Fitch in its statement.
Fitch recently revised its 2026 base-case brent oil price assumption to $87/barrel. This is now based on an assumption that the strait will begin reopening around July, extending the closure to about five months, from one to two months expected previously.
Oil prices average about $100/barrel in 2026 under Fitchâs adverse scenario, with Hormuz not returning to near normal flows until later in Q3 or possibly early Q4. The scenario highlighted material risks to several sectors in the Gulf Cooperation Council (GCC), including airlines, hotels, chemicals and homebuilders.
The ability of hydrocarbon producers to increase revenue and margins due to higher prices is conditional on their independence from Hormuz.
The ratings of 85% of GCC banks and of 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.-TradeArabia News Service
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