The chief executive of the world’s largest asset manager warns that a global recession could play out as the Strait of Hormuz stays closed.
In a new BBC interview, Larry Fink says oil could be much cheaper or soar to extreme price levels 12 months from now.
According to Fink, Iran’s standing on the world stage in the coming months will dictate the state of the global economy a year from now.
“I could see a year from now oil at $40 a barrel. I could see it above $150 a barrel. We have two very extreme outcomes. And in my conversations throughout the world with the US government and all that, to me, everybody has to recognize there’s not going to be an outcome that’s somewhere in the middle. It’s going to either be two extremes.
Is Iran a country that can be accepted by the international community? Can Iran be a country that participates in the world again? And if that outcome occurred, then you could have the Iranian oil back into the marketplace alongside the growth of the Venezuelan oil. And you could paint a picture where oil prices could be lower than they were prior to the Iranian war.
If there’s a cessation of war and yet Iran remains a threat, a threat to trade, a threat to the Strait of Hormuz, then I would argue that we could have years, years of above $100, closer to $150 oil.”
Fink offers a stark warning if the latter scenario plays out.
“We’ll have global recession.”
The last global recession took place in 2020, when the Covid pandemic struck, triggering widespread lockdowns. In 2008, the world witnessed the Great Financial Crisis triggered by the collapse of the US housing market, along with a surge in oil prices.
At time of writing, oil is trading at $94 per barrel.
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