World's largest asset manager predicts two oil price scenarios as war drags on

The Iran war has now stretched to nearly four weeks with no clear resolution in sight, as oil prices remain above $100 per barrel. Larry Fink, Chairman and CEO of BlackRock, outlined two sobering scenarios that he predicts for the future of oil and their potential impact on the global economy.

In a wide-ranging interview with the BBC, the chief of the world's largest asset management firms warned that if oil prices reach $150 per barrel, it could trigger a global recession.

Given BlackRock’s massive size and global reach, Fink, who is one of the firm’s eight co-founders since its launch in 1988, is uniquely capable of offering a perspective shaped by broad insight into economic conditions worldwide.

Asked about the trajectory of the conflict, Fink said he sees two possible outcomes: either the war ends, pushing oil prices lower, or it drags on without major political change in Iran, keeping prices elevated for years.

"I could paint a scenario where I could see, a year from now, oil at $40 a barrel," Fink described. "I could see it above $150. We have two very extreme outcomes." He added that a middle-ground scenario is unlikely.

In the first scenario, the war would end and Iran would reintegrate into the global economy. The reopening of the Strait of Hormuz would allow oil exports to resume, bringing prices down.

Using a rule of thumb from the US Energy Information Administration, where a $1 change in oil prices translates to about 2.4 cents per gallon at fuel stations, a $40-per-barrel scenario could see petroleum prices fall to roughly $2.40 per gallon—levels last seen during the pandemic recovery in early 2021.

The closure of the Strait of Hormuz—which carries about 20% of the world’s oil supply—has created what the International Energy Agency describes as the largest supply disruption in global oil market history. Reopening this critical route is central to both resolving the conflict and stabilizing the global economy.

According to Fink, the key question is whether Iran can be reintegrated internationally. "Can Iran be a country that participates in the world again? Can Iran be a country in which they are peacefully working side by side across the Persian Gulf with the GCC [Gulf Cooperation Council]?" he said. "That is one very big outcome."

While acknowledging uncertainty, Fink suggested that such an outcome could benefit the global economy.

"If that outcome occurred then you'd have the Iranian oil back into the marketplace alongside with the growth of the Venezuelan oil and you could paint a picture where oil prices could be lower than where they were prior to the Iranian war."

The second scenario envisions a prolonged conflict or continued policies by Iran that keep oil prices elevated for years.

Fink warned that "if Iran wants to continue to be an exporter of fear, then that's a very different outcome."

At $150 per barrel, the same pricing dynamic suggests gasoline could exceed $5 per gallon. Higher oil prices would also ripple through the broader economy—diesel powers transport networks, while natural gas and petroleum are key inputs for fertilisers. As energy costs rise, food prices typically follow, affecting everything from staple goods to household expenses.

"I would argue," Fink explained, "that we could have years, you know, above $100, closer to $150 oil which has profound implications in the economy. The $40 oil implication is one of abundance and growth and the other one is an outcome of probably a stark and steep recession."

By Nazrin Sadigova