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HFI Research said oil is entering a cycle in which continued supply shortages will push prices higher.
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The company is eyeing a sharp decline in global crude oil inventories.
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It added that even after a peace deal, it would take months for oil supplies to return to the market.
Peace between the United States and Iran remains elusive, but even if a deal is reached, oil prices will not fall quickly, a research firm said.
HFI Research, an investment research firm specializing in energy and commodities, said it believes the oil market has reached a “tipping point” two months into the Iran war and that supply disruptions will be long-term.
The company said in a report on Sunday that even if the United States and Iran reach a deal this week, the market will face severe shortages and eventual demand destruction, thanks in large part to the damage to refining capacity that has already been done.
HFI wrote: “The breaking point for the oil market has arrived. Global onshore oil inventories will fall sharply and at an unprecedented rate.”
The company added: “If the Strait of Hormuz remains closed after April, no one can tell you where oil prices peak. We will be too far in the Rubicon.”
HFI first predicted in late March that oil would hit a breaking point, saying it believed the market was now headed for a repeat cycle in which shortages of physical oil lead to higher prices. The report said this was mainly due to limited refining capacity in the Middle East, estimating that the war had caused global refinery outages to exceed 5 million barrels per day.
Rising oil prices are putting pressure on refining margins as oil prices rise faster than refined product prices. The company speculates that this is causing refineries to cut production, causing consumers to deplete oil and gas inventories more quickly.
HFI said it expects most Asian refiners will need to “scramble for oil” by the first week of May. Europe will also start to feel the pain of supply shortages by then, the company said, while the United States will likely reduce its commercial oil inventories to around 400 million barrels, just above the “minimum operating” level of about 380 million barrels.
The company estimates that the cumulative loss of oil reserves due to the closure of the Strait of Hormuz is about 1 billion barrels. It added that the shortage is expected to expand to 1.98 billion barrels by the end of June.
HFI said it could take months for oil supplies to recover even if a “long-term peace deal” with Iran is reached this week. It is estimated that it will take 30-40 days to transport and unload the barrels ready for market, and another 20 days for the tankers carrying the barrels to return to their original locations.
