BlackRock CEO Larry Fink has warned that a sustained spike in oil prices to as high as $150 per barrel could trigger a sharp global economic downturn, as ongoing West Asia tensions disrupt energy markets.
Speaking in an interview with the BBC, Fink said the outlook for oil prices depends on how the conflict involving Iran unfolds. “If Iran remains a threat and oil prices stay high, it will have profound implications for the world economy,” he said, warning that a prolonged period of elevated crude could lead to “a probably stark and steep recession.”
Fink described two possible scenarios — a de-escalation that enables Iran to reintegrate into the global economy could drive oil prices below pre-conflict levels, while a prolonged standoff could result in “years of above $100, closer to $150 oil”.
Fink characterised rising energy costs as a “very regressive tax”, emphasising that “it affects the poor more than the wealthy”. He called on governments to pursue a balanced approach to energy policy.
“Use what you have unquestionably, but also aggressively move towards alternative sources too,” he said, adding that consistently high prices could speed up investment in solar and wind energy.
However, despite worries about strain in certain segments of the financial system, including private credit funds, Fink rejected comparisons to the Global Financial Crisis.
“I don’t see any similarities at all. Zero,” he said, contending that financial institutions are far more resilient today.
Crude oil prices
Crude oil prices declined more than 4 per cent to Rs 8,340 per barrel in futures trade on Wednesday tracking weak global trends amid reports of possible negotiations between the US and Iran to end the war, PTI reported.
On the Multi Commodity Exchange (MCX), crude oil for April delivery depreciated by Rs 396, or 4.5 per cent, to Rs 8,340 per barrel. The May contract also fell by Rs 305, or 3.58 per cent, to Rs 8,209 per barrel. Analysts said crude prices came under pressure as a bearish sentiment gripped global energy markets following shifting geopolitical developments in West Asia.
“Crude oil prices took a hit on Wednesday opening with a gap down as bearish sentiment takes hold,” Aamir Makda, Commodity & Currency Analyst at Choice Broking, said. He added that much of this cooling is driven by a shift in the geopolitical landscape, according to PTI.
Globally, West Texas Intermediate (WTI) crude futures for the May contract slipped $3.21, or 3.48 per cent, to $89.14 per barrel on the NYMEX, while Brent Oil for June delivery decreased $4.65, or 4.64 per cent, to $95.58 per barrel in New York. (With Agency Inputs)
