A new analysis shows oil prices could rise to $200 per barrel, and even higher, in the next 12 to 18 months.

Philip K. Verleger, senior adviser to the global consulting firm the Brattle Group and adviser to Congress on commodity prices, released a report from his independent firm PKVerleger LLC this week that included this bold claim. He predicted a 2020 economic collapse based on the oil commodity market and the lack of diesel fuel.

“Catastrophically high oil prices will cause the impending recession,” said Verleger. “The world oil market will see prices at least double.” And from there, the sky is the limit, according to his analysis.

From the $200 mark, the price of crude oil could surge to a price of $400, he said. Prices currently range from $65-$74 per barrel.

Other analysts and oil market observers have noted that global oil reserves are thin and anticipate oil prices surging to $90-$100 per barrel after Iran sanctions kick in, while also pointing out the coming diesel crunch that Verlenger is watching.

Investment bank Morgan Stanley made a similar prediction as the world transitions from low-sulfur diesel, a cleaner-burning fuel, to lower emissions. “The stricter regulation on the fuels used by the shipping industry will result in booming demand for middle distillates that would boost crude oil demand by additional 1.5 million [barrels per day], potentially sending oil prices to as high as $90 a barrel in 2020," Morgan Stanley said this year.

Verleger says the global demand for low-sulfur diesel, which the U.S. transitioned to for trucks in 2010, will increase global demand for more expensive, less-heavy forms of crude oil to make the cleaner-burning fuel. This will place an enormous demand on the fuel, and because of the lack of refineries equipped to produce the fuel, will constrain supply and drive up prices.

And since most of the world relies on diesel fuel for commerce, it's something that directly impacts the economy, according to Verlenger.

“If nothing changes, the 2020 diesel and gasoil crisis will occur because as many as half of world refineries cannot produce fuel that meets the new regulation,” the analysis read. “The owners of these units will face harsh choices," including closing down their facilities.

The International Energy Agency said it in its latest 2023 projections that the "refining industries face a huge challenge" in implementing the new sulfur standards. "From the vantage point of early 2018, it is not clear how successful they will be, especially as demand for non-marine gasoil grades is growing steadily," the international government body said.

Many international energy analysts are worried about the coming 2020 transition to lower-emission fuels for marine vessels like shipping tankers, but Verlenger said the effects will be more widespread as demand for diesel soars.

"The economic collapse I predict will occur because the world’s petroleum industry lacks the capacity needed to supply additional low-sulfur fuel to the shipping industry while meeting the requirements of existing customers such as farmers, truckers, railroads, and heavy equipment operators," he report read.

"In most countries, they must buy low-sulfur diesel fuel to reduce pollution," he added. "Quite simply, low-sulfur diesel fuel or gasoil is the nail essential for 21st-century economies, governments, and militaries to function."