U.S. oil prices are in a "ferocious" bear market, and crude could fall to as low as $40 per barrel, CNBC's Jim Cramer said Thursday.

"Oil is collapsing guys. It's collapsing," Cramer said on "Squawk on the Street." Asked if prices could fall to $50 per barrel, Cramer said, "I could make a case for the $40s here. I'm not kidding."

The "Mad Money" host did not provide a timeline for his case.

Oil was lingering near multimonth lows on Thursday morning, with the American benchmark West Texas Intermediate crude dropping to around $61 per barrel.

Record U.S. crude production and signals from Iraq, the United Arab Emirates and Indonesia that output will grow more quickly than expected in 2019 were pressuring oil prices.

"Demand is slowing for oil and we're pumping like mad," Cramer said Thursday.

Oil demand is still expected to rise next year, but forecasters now expect less robust growth in global crude consumption due to economic concerns fueled by trade tensions and currency weakness in emerging markets.

Cramer said Monday that rosy outlooks from major oil companies Exxon Mobil, Chevron and BP do not reflect the economic reality. He said investors betting on those companies may be making a "bad call."

That same day President Donald Trump announced that the U.S. would once again impose sanctions on Iran's energy sector.

"You'd think that the price of oil would be soaring," following news of the sanctions, Cramer said at the time. "But instead it actually closed down on the day."

— Reuters and CNBC's Carmin Chappell contributed to this report.