Oil prices have skyrocketed globally following the impact of the Strait of Hormoz closure [Getty/file photo]
The world risks slipping into a global recession if oil prices surge due to the war in Iran, the CEO of investment firm BlackRock has warned.
Larry Fink said oil prices could climb as high as $150 a barrel if Iran continues to pose a threat even after the war ends.
“If there is a cessation of war, and yet Iran remains a threat – to trade, to the Strait of Hormuz, to the peaceful coexistence of the GCC region – then we could see years of oil above $100, closer to $150, which would have profound implications for the global economy,” Fink told the BBC’s Big Boss Interview podcast.
Iran has effectively disrupted traffic through the Strait of Hormuz for nearly four weeks, severely impacting global oil shipments and logistics.
Around one-fifth of the world’s oil supply passes through the strait.
As a result, oil prices have surged to around $100 per barrel, while exports have dropped sharply. Brent crude has reached its highest levels in nearly four years, at one point nearing $120 a barrel.
The disruption has also forced major producers such as Saudi Arabia and the UAE to scale back production and suspend operations at some oil fields.
Oil prices remain volatile amid uncertainty over the conflict. On Wednesday, prices fell by about four percent following reports that the US had sent Iran a 15-point proposal aimed at ending the war, raising hopes of a ceasefire.
However, prices are expected to rise again after Iran rejected the proposal, saying it would end the war “on its own terms”.
Experts warn that even if the conflict ends immediately, oil production could take four to five months to return to normal. Restarting idle facilities, repairing damaged infrastructure, and clearing maritime congestion in the Strait of Hormuz are expected to take time.
The disruption has also had wider economic consequences. Major oil importers such as Turkey have reportedly turned to gold reserves to stabilise their currencies amid rising energy costs.
