The head of BlackRock has warned that a sustained surge in oil prices driven by tensions involving Iran could trigger a severe global economic downturn. Get today's headlines by email Larry Fink said that if geopolitical tensions persist and oil prices remain elevated, the consequences for the global economy could be significant. Energy Prices Seen as Key Risk“If Iran remains a threat” and oil prices stay high, he said, the impact would be far-reaching. He outlined a scenario in which crude prices could remain above $100 a barrel for an extended period, potentially reaching $150. Such levels, he warned, would likely result in “a probably stark and steep recession”. However, Fink also pointed to an alternative outcome, suggesting that if the conflict were resolved and Iran re-integrated into the international community, energy prices could fall back below pre-war levels. Market Volatility and Energy StrategyThe ongoing conflict in the Middle East has led to sharp fluctuations in global financial markets, as investors attempt to assess the long-term impact on energy supply and costs. Fink said countries must adopt a pragmatic approach to energy policy, balancing different sources to ensure stable and affordable supply. He stressed that access to low-cost energy is essential for economic growth and improving living standards. His comments come as some industry groups have called for increased domestic oil and gas production to reduce reliance on imports during periods of geopolitical instability. No AI Investment BubbleDespite concerns over heavy investment in artificial intelligence, Fink rejected suggestions that the sector is experiencing a speculative bubble. “I do not believe we have a bubble at all,” he said, while acknowledging that some individual projects may fail. He described a global race for technological leadership and argued that continued investment is essential, particularly in the face of competition from other major economies. BlackRock has been involved in major deals in the sector, including investments in large-scale data centre infrastructure. Energy Constraints and Workforce ShiftsFink identified energy costs as a major constraint on the expansion of AI, particularly in the United States and Europe. He warned that insufficient investment in affordable power generation could hinder technological progress. At the same time, he suggested that AI would reshape the labour market, creating increased demand for skilled trades such as electricians, welders and plumbers. He argued that too many people have been encouraged to pursue university education at the expense of vocational training, calling for a rebalancing of priorities as economies evolve. Broader Economic OutlookWith energy prices closely tied to geopolitical developments, Fink said the direction of the global economy will largely depend on how the current conflict unfolds. A prolonged period of high oil prices, he indicated, would not only strain households and businesses but could also tip the world into recession. Join the discussion? Already a member? Adapted by ASEAN Now. Source 25 March 2026
View full article
Create an account or sign in to comment