YESTERDAY the BBC published on its website an interview with Larry Fink, boss of the US financial giant BlackRock, in which he gave the dire warning that if the price of oil hit $150 a barrel, it would immediately plunge the world into recession.
BlackRock is, the BBC says, ‘a financial colossus, controlling assets worth $14 trillion (£10.5 trillion), and is one of the biggest investors in many of the world’s largest companies.’
Given the massive stake Fink and BlackRock have in the financial future of capitalism, his words and warnings will be taken seriously by Trump and his US administration.
Fink basically set out two extreme scenarios he believes will be the outcome of the illegal war being waged by the US and Israel, in an unsuccessful war to crush Iran.
The first involves a peaceful negotiated settlement between Iran and the US-Israeli government leading to Iran reopening the Strait of Hormuz and resulting in oil prices falling back to where it stood before Trump launched his disastrous war.
The second scenario is the one keeping Fink and the entire capitalist financial world awake at night.
If Trump doesn’t back down from the war, then Fink predicts ‘years of above $100, closer to $150 a barrel of oil, which has profound implications in the economy’ and an outcome of ‘a probably stark and steep recession’.
This goes a long way to explain Trump’s increasingly deranged statements on Truth Social proclaiming that Iran was ‘desperate’ to negotiate a peace settlement in an attempt characterised by the Iranian government to ‘manipulate’ the oil markets.
At the same time, the US and Israel have intensified their bombings against Iranian infrastructure and Trump has sent troop carriers into the Persian Gulf.
The contradictory messages from Trump has sent the world’s oil and gas markets into a state of frenzy with oil prices dipping following his claim that Iran was prepared to cave in, only to shoot up to around $120 a barrel when Iran made it clear it would not surrender and was prepared to escalate the war against all those states who support US military assets.
Fink was warning Trump that escalating the war either through ground invasion or ramping up the murderous missile attacks would rebound to an even greater extent and plunge global capitalism into recession that would be far greater than the Great Depression of the 1930s.
During the interview, Fink was keen to isolate oil as the main, indeed only, crisis driving world capitalism over the brink into collapse.
He strenuously denied the comparisons being made by analysts with the run-up to the 2007-08 world banking crash which was also accompanied by a sharp increase in oil price.
One major difference between the 2008 banking crash and today is that then the central banks were able to bail-out collapsed banks by massive money printing and savage austerity cuts imposed on workers.
But today, as one Iranian official pointed out this week, banks can print money but not ‘oil molecules’.
The oil crisis is driving up inflation in the UK leading to Labour chancellor Rachel Reeves having to find an extra £2.5 billion more on benefits if she increases payments in line with the cost of living.
Economists are warning that higher prices triggered by imperialist war will add billions to the interest payments on the UK national debt leaving Reeves facing up to an extra £20 billion of money that the Labour government will demand from workers’ benefits and pay packets.
At the end of the day, the working class will be expected to pick up the bill for a war by US imperialism to reorganise the Middle East and secure its oil and mineral wealth for exploitation by a handful of capitalists.
Capitalism has reached the end of the road and today is incapable of solving its crisis except through wars against workers at home and war against workers and masses abroad.
The working class in the UK, US, Europe and across the world must unite and demand their trade unions organise general strikes to bring down their capitalist governments and bring in workers governments that will expropriate the bosses and bankers and build a socialist planned economy!