Oil at $US150 will trigger global recession, BlackRock boss Larry Fink warns

A surge in oil prices to as high as $US150 a barrel will trigger a global recession, the boss of the world’s biggest fund manager, BlackRock, has warned.

Larry Fink said the outlook for oil prices hinged on how the conflict in the Middle East evolved.

“If Iran remains a threat and oil prices stay high, it will have profound implications for the world economy,” he told the BBC.

He cautioned that a prolonged period of elevated crude could result in “a probably stark and steep recession”.

But Mr Fink reckons it is still too early to determine the ultimate scale and outcome of the conflict.

He outlined two possible extreme scenarios: a de-escalation that allows Iran to re-integrate into the global economy could push oil prices below pre-conflict levels, while a prolonged standoff could lead to “years of above $US100, closer to $US150 oil”.

Oil markets have already tightened significantly. The February 28 air strikes on Iran caused crude oil prices to shoot above $US100 a barrel for the first time in four years, resulting in motorists paying more than $2.50 for unleaded petrol.

If oil prices were to rise to $US150 for three or four years, “you would have so many countries moving so rapidly towards solar and maybe even wind”, Mr Fink said.

Countries should not depend on just one source, he said.

“Use what you have unquestionably, but also aggressively move towards alternative sources too.”