Institutional warning: Oil prices rise to $200 or trigger a global recession

BlockBeats News, April 29 — In its latest quarterly outlook, BNP Paribas warned that if international oil prices rise to $200 per barrel, combined with supply chain disruptions and global monetary tightening, the global economy could fall into recession. BNP Paribas stated that the current escalation of the Iran situation has already begun to impact the global economy. The bank expects that, compared to early-year forecasts, global GDP growth will slow and inflation will remain high, while central banks in various countries may be forced to maintain a more hawkish policy stance.

Affected by the Middle East situation, international oil prices continued to rise on Wednesday. WTI crude oil intraday gains expanded to 5%, and Brent crude oil broke through $109 per barrel. Market concerns about confrontation between Iran and the U.S. over the Strait of Hormuz may further threaten global energy transportation.

BNP Paribas believes that even if oil prices do not reach the extreme scenario of $200, with the baseline forecast of an average oil price of about $100 per barrel in the first half of the year, the global economy is already close to recession. The bank defines “global recession” as a global GDP growth rate below 2.5%, and expects this year’s global economic growth to be around 3%, below the 3.5% average of the past decade. The report points out that, besides soaring oil prices, two other major risks could also trigger a recession:

Disruption of Strait of Hormuz transportation leading to worsening energy and supply chain bottlenecks;
High inflation forcing global central banks to continue tightening monetary policy.

BNP Paribas also warns that long-term conflicts could impact the supply of helium needed for chip manufacturing, rubber and chemical components in Asia, as well as global fertilizer supplies, further driving up prices of food and industrial products.