Here’s what the next phase of the Iran war oil crisis could look like

• HFI Research says it believes oil prices will break records in a few months.

• The research firm sees “panic buying” and hoarding as the world reduces crude oil supplies.

• It has been predicted that the shortage could create a “ripple effect” that would push prices above $150 per barrel.

The world may be about to enter its next chapter Iran war oil crisis A research firm predicts that crude oil will rise further.

HFI Research, an investment research firm specializing in energy markets, has outlined a series of dire events that could unfold in oil markets as the Iran war completes its second month with no peace deal in sight.

oil pricesOil prices, which have been rising since the closure of the Strait of Hormuz, reached new wartime highs this week. Brent crude oilOil, the international benchmark, rose as high as $126 per barrel early Thursday. West Texas Intermediate Crude oil rose to $110 per barrel.

The firm predicted this week that prices cooled later in the day but would likely bounce back to new highs within a few weeks. Brent is projected to exceed $150 per barrel, potentially above the peak during the Great Financial Crisis.

By comparison, global oil demand fell by about 3% during the GFC, HFI founder Wilson Wang told Business Insider in an email. The world currently faces supply shortages of about 13 million barrels per day, or 10% of global demand, according to estimates from the International Energy Agency.

“We are three times away from the worst financial crisis in recent history. Prices will have to reach extreme levels,” Wang said.

The firm has previously stated that it believes the oil market has already reached its target.”breaking point“It is a point of no return where persistent supply shortages push crude oil prices ever higher.

Here’s how this dynamic will play out over the next few months.

More flight cancellations, production cuts

First, Europe and Asia will continue to feel the pain of supply shortages. More flights are likely to be canceled Refineries that produce petroleum products from crude oil also look set to retreat amid the shortage, as jet fuel runs low in both regions.

While other countries were looking for alternative sources for petroleum products, the USA also stood out as a supplier. The firm predicted this situation would continue “for the foreseeable future,” with oil exports from the United States remaining near all-time highs for several weeks.

“The US SPR version is effectively exported to the rest of the world,” Wang said.

US finally runs out of excess oil reserves

The firm said that given the current pace of oil sales, the United States is on track to deplete its “buffer” crude product stores within two weeks and its buffer oil stores in about eight weeks.

Exports will likely begin to decline within a few weeks. Wang said Americans may also begin stockpiling gas once gasoline stocks begin to dwindle, which could happen within three to four weeks, adding that the United States could even impose a formal ban on exports of the product to preserve supplies.

China, which has the world’s largest strategic oil reserves, is a wild card. The country has several months of oil supply from its strategic reserve, but will likely continue to do so. stack oil Anyway, HFI said, given the country’s fear that closing the Strait of Hormuz is an “existential risk” for its oil-heavy economy.

“Today, the only buffers between high oil prices and very high oil prices are the buffers in the United States and China,” the firm wrote.

Panic buying begins

HFI predicts that richer Asian countries will begin panic buying, creating a “ripple effect” in oil markets.

The firm added that once US crude exports begin to decline, this will only create “higher purchasing pressure” in regions such as Asia. Higher crude oil prices will increase refiners’ profit margins, which will increase oil demand.

“The ripple effect will be that both refining margins and crude oil prices rise together until one of them breaks.”

Oil prices skyrocketed

The company said it was impossible to know where oil prices would land until the U.S. pulled back from selling on the global market, although it predicted prices could exceed $150 a barrel, surpassing their 2008 peak.

If Brent were to reach crisis-era highs, this would represent a 43% increase from current levels.

“As the US runs out, you will see oil prices go parabolic,” HFI wrote about the forward outlook for supply and prices. “Financially it will be worse than 2008.”

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