BlackRock CEO speculates on the Iran war outcome: if oil prices rise to $150, it will trigger a global recession

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China Finance Network (Cailian Press) March 25 News (Editor Liu Rui) Larry Fink, CEO of BlackRock, a U.S. financial giant, said that if the Iran war continues and oil prices remain high, it will have a “far-reaching impact” on the world economy. If oil prices reach $150 per barrel, it will trigger a global economic recession.

Fink also predicted two possible outcomes that this Iran war may ultimately take, and advised countries to be more pragmatic and diversified in their energy-structure choices.

Possible Outcomes of the Iran War?

BlackRock manages assets worth $14 trillion, and is one of the largest investors in many of the world’s major companies. As one of the company’s eight co-founders, Fink has unique insights into the health of the global economy.

At present, conflicts in the Middle East have triggered violent fluctuations in financial markets, and all investors are trying to assess how energy costs will change.

As for Fink, he says it’s still too early to judge the final scale and outcome of this conflict. But he believes the final result will come down to one of two possibilities—either:

First, the conflict is resolved, and Iran becomes a country once again acceptable to the international community, then oil prices could fall back to levels below those before the war;

Second, oil prices could remain above $100 per barrel for years, even approaching $150, which would have a far-reaching impact on the global economy and may lead to “a potentially severe and intense economic recession.”

Could Solar and Wind Stand to Benefit?

Given that supply risks for oil prices are high, Fink believes that countries need to be more pragmatic in their choices of energy structure and make full use of all available energy resources. In addition, providing affordable energy is crucial for driving economic growth and improving living standards.

“Rising energy prices are a very unfair tax. They affect poor people more than rich people.”

He also noted that if oil prices rise to $150 per barrel within the next three or four years, “then many countries will quickly shift to solar energy, and possibly even to wind energy.”

The Financial Crisis Won’t Repeat Itself

Some analysts believe there are signs in today’s market conditions that are similar to those seen before the 2007–08 financial crisis: energy prices keep rising, and some people have also found signs of cracks in the financial system.

For example, “the new bond king” Jeffrey Gundlach recently warned that the overall atmosphere in the private credit market is like the period before the 2008 financial tsunami. Gundlach said that the private credit market currently faces enormous redemption pressure and has extremely low overall transparency—almost the same as the 2007 collateralized debt obligation (CDO) bubble.

But Fink is confident that a financial disaster like that of 2007–08 will not repeat, because he believes financial institutions today are more solid.

“I can’t see any similarity at all,” he said directly. “The similarity is zero.”

He also said that issues affecting certain funds account for only a small part of the overall market, while investment by mainstream institutions remains strong.

(China Finance Network, Liu Rui)