Peter Berezin, Chief Global Strategist at BCA Research, has issued a stark warning: the escalating Iran crisis is pushing the global economy toward dangerous territory. In an interview with The David Lin Report, he stated that the probability of a US recession has risen to 40%, while the recession risk for Europe and Japan has surged to 50%. The core issue lies in the Strait of Hormuz, through which about 20% of global crude oil passes, and currently approximately 10% of global supply is disrupted.
Oil Price Shock: $200 Per Barrel Is Not Far-Fetched
Berezin noted that oil demand is highly inelastic, meaning a 10% reduction in consumption would likely require prices to double or even triple. “If global oil production were to decline persistently by about 10%, it’s very easy to imagine oil prices soaring to $200 a barrel,” he said. He recalled that during the worst of the pandemic, global oil consumption fell by roughly 20%, which is equivalent to the daily volume passing through the Strait of Hormuz. If supply disruptions persist, the entire supply chain—from fertilizers to plastics—will be impacted.
Notably, commodity traders are not as optimistic as equity investors. The Nasdaq has fallen about 7.5% year-to-date, hitting a trough decline of 12%—its worst start since 2022—while oil prices remain above $100 a barrel. Berezin views this divergence as a strong warning signal: commodity markets may more accurately reflect the energy price outlook than stock markets.
Europe and Japan Bear the Brunt
Europe and Japan face particularly elevated recession risks, approaching 50%. Berezin explained that higher oil prices hit these trade-dependent economies harder than the US. In the short term, rising oil prices benefit the dollar, but the dollar faces structural headwinds: it remains overvalued on a purchasing power parity basis, decades of current account deficits, and central banks diversifying away from dollar reserves. He expects that after the current correction, gold will benefit from reserve diversification over the next several months to years.
Ceasefire Talks Stall
Regarding the Iran conflict itself, Berezin still expects a negotiated settlement as his base case, but he warned that the assassination of Iran’s core leadership has created a power vacuum, making short-term compromise difficult. Hardline politicians tend to rise in such environments, hindering a rapid resolution. Meanwhile, President Trump has demanded the seizure of Iranian oil and the opening of the Strait, while Iran has rejected a 45-day ceasefire proposal. The April 8 attack deadline is approaching, keeping geopolitical risk elevated.
AI: Plummeting Compute Costs Could Alter Investment Logic
Shifting to artificial intelligence, Berezin highlighted that AI compute costs are falling sharply, citing a Wall Street Journal article on Caltech research. He compared it to internet infrastructure: data transmission has grown roughly 500,000% over the past 25 years, yet spending on that infrastructure as a share of GDP has declined. AI may follow a similar path, potentially rendering the anticipated trillions of dollars in data center investment unnecessary. “Ironically, we will end up with an AI-driven world, but we may not need trillions of dollars of data centers to get there,” he said. In the short term, this could negatively impact copper and base metals, but over the long term, genuine AI-driven productivity gains will eventually create demand for finite physical resources.
IPO Market: Favoring Anthropic but Warning of Peaks
Asked about anticipated IPOs in 2026, such as SpaceX, OpenAI, and Anthropic, Berezin said if he had to pick one, he would choose Anthropic, citing its position in enterprise AI services and the benefit of lower compute costs. However, he cautioned that a wave of large IPOs often signals a sector peak. Regarding AI’s impact on employment, he strongly pushed back against Anthropic CEO Dario Amodei’s warning that AI could eliminate half of all entry-level office jobs within five years and push unemployment to 10-20%. Berezin emphasized that economists understand productivity gains ultimately lead to rising incomes in equilibrium, and the resulting inequality would likely trigger fiscal and monetary policy responses that prevent unemployment from spiking dramatically.