The head of the world’s biggest commodity manager has warned that a further rise in oil prices to $150 a barrel could send the world economy into a deep recession, as political tensions continue to weigh on energy markets.
Larry Fink, the chief executive of BlackRock, said that the origin of the conflict in the Middle East, especially the role of Iran, will determine whether the world is facing a short-term disruption or a long-term economic shock.
“If oil prices continue to rise and Iran remains a threat, that will have a big impact,” he said, warning that the continued high price situation could lead to “a major economic downturn”.
Fink presented two different outcomes for global markets.
In the most optimistic scenario, resolution of the conflict and stabilization of relations could see oil prices fall back below pre-war levels, easing inflationary pressures and supporting growth.
However, in an even more pessimistic scenario, prolonged instability could drive oil prices above $100, and possibly even $150, for several years. That would significantly increase costs for businesses and consumers, acting as a drag on economic activity around the world.
Energy prices have already risen in recent weeks, with Brent rising sharply amid supply disruptions and growing uncertainty over future production.
Fink stressed that rising energy prices disproportionately affect low-income families, describing it as a “highly regressive tax”.
“High energy costs affect the poor the most,” he said, noting that further increases would not only reduce consumer spending but also increase inequality.
The warning comes as governments, including the UK, face increasing pressure to protect households and businesses from rising costs, even as public finances are stretched.
The BlackRock executive urged policymakers to adopt a more rational approach to energy policy, combining existing fossil fuel resources and accelerated investment in renewables.
“Use what you have, of course, but also extend to other areas,” he said.
He argued that higher oil prices could ultimately accelerate the global transition to clean energy, as countries seek to reduce reliance on volatile fuel markets. Solar and wind power, in particular, could see rapid expansion if energy costs remain high.
However, he warned that progress is uneven. While China is investing heavily in solar and nuclear power, Europe is at risk of falling behind due to slow implementation and regulatory conditions.
Despite market volatility, Fink dismissed comparisons to the 2007-08 financial crisis, insisting that today’s financial system is resilient.
“I don’t see any similarities, zero,” he said, arguing that while there is pressure from places like private equity funds, it represents a small part of the overall market.
Fink also addressed concerns about a potential bubble in artificial intelligence, rejecting the idea that investment in the field is overblown.
“I don’t believe we have a bubble at all,” he said, although he acknowledged that some companies may fail as technology advances.
He pointed out that AI is part of a wider race for technological dominance, particularly between the US and China, and that continued investment is essential to remain competitive.
At the same time, he highlighted the revolutionary impact AI could have on the labor market. While some traditional office roles may decline, he expects significant job creation in skilled trades.
“There will be a huge demand for electricians, welders and plumbers,” he said, suggesting that societies will have to rethink their education and career paths.
With BlackRock overseeing roughly $14 trillion in assets, Fink’s opinion carries significant weight among policymakers and investors.
His warning underscores the fragile state of the global economy, where energy markets, political tensions and technological change are converging to reshape growth prospects.
For now, the key variable remains fuel. If prices continue to rise to the $150 threshold, the risk of a recession will increase significantly, forcing governments and central banks to navigate a more difficult and volatile economic environment.
