According to BCA Research chief global strategist Peter Berezin, the escalating Iran situation has raised the probability of a U.S. recession to 40%, while Europe and Japan face even higher risks at 50%. In an interview with The David Lin Report, Berezin warned that if global oil supply is disrupted by 10% on a sustained basis, crude prices could surge to $200 per barrel, inflicting severe damage on global supply chains from fertilizers to plastics.
Oil Supply Shock and Price Surge
Berezin highlighted the Strait of Hormuz, through which about 20% of global oil supply passes, noting that roughly 10% of global supply is currently disrupted. Because oil demand is highly inelastic, reducing consumption by 10% would likely require prices to double or triple. “If global oil production is persistently reduced by about 10%, it is very easy to foresee oil prices hitting $200,” he said. He recalled that during the worst of the pandemic, global oil consumption fell by about 20%, equivalent to the daily volume passing through the Strait.
With crude already trading above $100 per barrel, Berezin argued that commodity traders are pricing in greater risk than equity investors reflect. This divergence serves as a warning signal, as commodity markets tend to have more accurate information about energy price direction.
Europe and Japan at Higher Risk
Berezin stated that recession probability for Europe and Japan is close to 50%, partly because high oil prices hit these countries' terms of trade harder than the U.S. While higher oil prices benefit the dollar in the short term, the greenback faces structural headwinds including overvaluation on a purchasing power parity basis, decades of current account deficits, and central bank diversification away from dollar reserves. He recommended that after a correction phase driven by retail profit-taking, gold will benefit from this asset diversification trend over the coming months to years.
Regarding the Iran conflict itself, Berezin believes a negotiated settlement remains the base case, but the power vacuum created by the assassination of Iran's core leadership makes short-term compromise difficult. Such environments tend to empower hardline politicians, hindering a quick resolution.
AI and IPO Outlook
Turning to AI and its impact on the broader tech sector, Berezin noted that AI innovation has moved beyond software and is now threatening social media companies. AI agents will increasingly deliver content directly to users, potentially reducing platforms like Instagram and YouTube to mere content repositories. He also cited a Wall Street Journal article covering Caltech research showing that the computational cost of large language models is plummeting, which could make the anticipated trillions of dollars in data center spending unnecessary. “Ironically, we may end up with an AI-driven world, but we may not need trillions of dollars in data centers to get there,” he said.
Regarding upcoming IPOs in 2026 such as SpaceX, OpenAI, and Anthropic, Berezin said if forced to pick one, he would choose Anthropic due to its position in business AI services and the advantage of lower computing costs. However, he warned that a wave of large IPOs often signals the peak of that sector.
Iran Rejects Ceasefire Proposal
After Tehran rejected a 45-day ceasefire proposal, President Trump announced he would seize Iranian oil and demand the strait be opened. With an April 8 attack deadline approaching, tensions are escalating further. Berezin warned that the current environment does not favor a quick resolution, and commodities and safe-haven assets are likely to continue benefiting.