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

• HFI Research said it believes oil prices will reach record highs in the coming months.

• The research firm believes there will be “panic buying” and hoarding as the world’s crude supply dwindles.

• It is speculated that the shortage could cause a “chain reaction” that could push prices above $150 a barrel.

The world may be about to enter a new chapter in the Iran-war oil crisis, with crude prices set to soar further, a research firm predicts.

HFI Research, an investment research firm specializing in energy markets, has outlined a series of grim events that could happen next for the oil market as the war with Iran enters its second month and with no peace deal in sight.

Oil prices have surged since the closure of the Strait of Hormuz, hitting new wartime peaks just this week. International benchmark Brent crude rose to $126 a barrel early Thursday, while West Texas Intermediate crude rose to $110 a barrel.

The firm speculated this week that prices cooled off later in the day but could return to new highs within weeks. Brent crude oil prices are expected to surge to over $150 a barrel, higher than their peak during the financial crisis.

By comparison, global oil demand fell about 3% during the global financial crisis, HFI founder Wilson Wang told Business Insider in an email. The International Energy Agency estimates that the world currently faces a supply shortage of about 13 million barrels per day, or 10% of global demand.

“We are three times away from the worst financial crisis in recent memory. Prices are going to have to become very extreme,” Wang said.

Previously, the company said it believed the oil market had reached a “tipping point,” a point of no return, with ongoing supply shortages leading to ever higher crude prices.

Here’s what it has to say about this dynamic in the coming months.

More flights canceled, production reduced

First, Europe and Asia will continue to feel the pain of supply shortages. Due to a shortage of aviation fuel in both regions, more flights may be canceled and refineries that use crude oil to make petroleum products may reduce production due to shortages.

As other countries seek alternative sources of petroleum products, the United States has emerged as a supplier. The company predicts that this situation is likely to continue for the “foreseeable future,” with U.S. oil exports remaining near record highs for several weeks.

“SPR releases in the United States are actually being exported to other parts of the world,” Wang said.

The U.S. Finally Depleted Its Excess Oil Reserves

The company said that given the current pace of oil sales, the United States will exhaust its “buffer” crude stocks in two weeks and buffer oil stocks in about eight weeks.

Exports may start to decline in a few weeks. Americans may also start stockpiling natural gas once gasoline inventories begin to dwindle, which could happen within three to four weeks, Wang said, adding that the U.S. may even enact a formal export ban on the product to maintain supplies.

China, which has the world’s largest strategic oil reserves, is a wildcard. HFI said the country could release months of oil supplies from its strategic reserves but may continue to stockpile amid concerns that the closure of the Strait of Hormuz poses an “existential risk” to its oil-based economy.

“The only buffer between current high oil prices and a sharp increase in oil prices is that of the United States and China,” the company wrote.

Panic buying begins

HFI predicts that richer Asian countries will begin panic buying, which will have a “ripple effect” in the oil market.

The company added that once U.S. crude exports start to decline, it will only create “higher buying pressure” in regions such as Asia. Rising crude oil prices will boost refinery profit margins, thereby increasing demand for oil.

“The knock-on effect will be that refining profits and crude oil prices rise in tandem until one or the other breaks through.”

Oil prices soar

The company said it was impossible to know where oil prices would fall until the U.S. stops selling oil on global markets, but predicted prices could exceed the 2008 peak at $150 a barrel.

If Brent crude oil prices reach crisis-era highs, it would represent a 43% rise from current levels.

“Once the U.S. runs out of oil, oil prices will go parabolic,” HFI wrote of future supply and price prospects. “It will certainly be worse than 2008.”

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