HFI Research warns the oil market is headed for a breaking point in early June if the Strait of Hormuz stays closed. The research firm said that without a reopening, global oil inventories will hit rock bottom, triggering panic-buying and hoarding that could send crude into a vicious cycle of shortages and record prices.
The Strait's closure has already drained reserves. Brent crude has remained above $100 a barrel for most of the past month, and the US has drawn down 1.6 billion barrels of oil and petroleum products as of May 8, down 67 million from early April. HFI predicted in late April that the US would deplete its excess crude by the end of June.
Most oil forecasters assume supply will normalize by June. HFI disagreed, calling those predictions driven by "psychological biases" in the market. The firm does not expect normalization if the Strait remains closed past the first week of June, when the math on inventory depletion becomes unavoidable.
HFI said crude prices rising past $150 a barrel was possible once panic-buying takes hold, though the firm has no concrete price target.
The June 1 deadline and inventory levels stand as the pivot point. If the Strait reopens before reserves hit bottom, global oil markets stay shaky but functional. If it remains closed, oil scarcity stops being a headline and becomes a structural shortage.
