If the price of oil hits $150 a barrel it will trigger a global recession, the boss of US financial giant BlackRock has told the BBC.
Larry Fink, who leads the world’s largest asset manager, said if Iran “remains a threat” and oil prices stay high it will have “profound implications” for the world economy.
In a wide-ranging exclusive interview, he also denied there was an AI bubble, although he said the new technology meant too many people were pursuing university degrees and not enough doing technical training.
BlackRock is a financial colossus, controlling assets worth $14 trillion (£10.5tn), and is one of the biggest investors in many of the world’s largest companies.
Its size and spread gives Fink – who is one of the eight co-founders of the business, which started in 1988 – a unique insight into the health of the global economy.
The conflict in the Middle East has triggered wild moves on financial markets as people try to assess what will happen to energy costs.
For Fink, it is too early to determine the ultimate scale and outcome of the conflict, but he believes it will be one of two extreme scenarios.
In one, if the conflict is settled and Iran becomes a country that can be accepted again by the international community then the price of oil could fall back to below where it stood before the war.
But if not, he says, then there could be “years of above $100, closer to $150 oil, which has profound implications in the economy” and an outcome of “a probably stark and steep recession”.
The surge in energy costs has led to some in the UK to argue that it should be focusing more on producing its own oil and gas.
Fink says countries need to be pragmatic about their energy mix by using all sources available to them, but providing cheap energy is key to driving growth and raising living standards.
“Rising energy prices is a very regressive tax. It affects the poor more than the wealthy.”
While the UK already has some solar and wind power and hydrocarbons, if oil prices were to rise to $150 for three or four years, “you would have so many countries moving so rapidly towards solar and maybe even wind”.
Countries should not depend on just one source, he says.
“Use what you have unquestionably, but also aggressively move towards alternative sources too.”
