Are we about to enter a global recession? Fears grow oil could hit $150 a barrel

Petrol prices, as pictured here at a forecourt in Liverpool, are increasing with fears that a recession could be triggered (Picture: EPA)

Financial markets have plummeted, and oil prices have surged as the Iran War enters its fourth week – with fears it could spark a global recession.

Brent crude lifted 1% to nearly 114 US dollars a barrel after Iran warned it would strike electrical plants across the Middle East if US President Donald Trump bombs power stations in the Islamic Republic.

Now the boss of investment giants BlackRock has warned that if the price of oil surges to $150 per barrel, it would trigger a global recession.

Larry Fink told the BBC if the conflict isn’t settled, there could be ‘years’ of high prices and a ‘stark and steep recession’.

‘Rising energy prices are a very regressive tax. It affects the poor more than the wealthy,’ he said.

Thomas Sampson, associate professor of Economics at the London School of Economics (LSE) told Metro that while it is possible for a recession to occur, it will depend on the severity and duration of the oil shock.

‘I don’t think the impact so far is large enough to lead to a recession, but there is still a lot of uncertainty over what comes next,’ he said.

How would a recession affect the UK?

Household prices would increase if the oil shock continues (Picture: Getty)

Yesterday, Morgan Stanley warned high energy prices from the war could hike interest rates and hurt the wallets of everyday Brits.

Just this week, it was warned the price of your food shop could go up in weeks.

Bruna Skarica, an economist at Morgan Stanley, told the Guardian: ‘Should these financial conditions and commodity prices be sustained in the coming months, we would be calling for a pronounced UK recession at the turn of the year.’

Inflation in the UK has remained around 3% throughout February, but investment experts have warned that increasing oil prices could soon push inflation to nearly double the 2% target by the end of the year.

Weeks of intensifying attacks in the Middle East, disruption to energy production, and shipping delays in the Strait of Hormuz are all likely to have significant impacts on the global economy.

The price of Brent crude oil currently sits at around $98.2, more than 30% higher than before the conflict first escalated at the end of February.

Petrol and diesel prices for UK drivers have since increased and are therefore likely to show an impact in the official inflation data for March.

Oil tankers have been struggling to travel through the Strait of Hormuz (Picture: Getty)

The average price of a litre of petrol at UK forecourts has risen from 132.9p on February 27 to 146.4p on Monday.

Diesel prices have surged from 142.4p to 169.8p over the same period.

The significant increase in gas prices is also set to feed through into energy costs for UK households and businesses.

The household energy price cap for April is already fixed and will result in a decrease in bills, but higher pricing is expected to feed into the next pricing period, which starts in July.

Energy consultancy Cornwall Insight said its forecast for the watchdog’s next price cap had surged to £1,973 a year for a typical dual fuel household – an increase of £332 or 20% on April’s cap.

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