BCA Research's chief global strategist Peter Berezin has issued a stark warning: the geopolitical conflict with Iran has pushed the probability of a US recession to 40%, while Europe and Japan face even higher risks, approaching 50%. He also cautioned that a sustained disruption in oil supply could send crude prices surging to $200 per barrel, with far-reaching consequences for global supply chains.
Recession Odds and Oil Price Forecast
In an interview on the David Lin Report, Berezin highlighted that the Strait of Hormuz carries about 20% of global oil traffic, and roughly 10% of world supply is currently interrupted. Because oil demand is highly inelastic, prices would need to double or triple to reduce consumption by 10%. “If we have a sustained drop in global oil production of about 10%, it is very easy to imagine oil prices reaching $200,” he said.
Berezin noted that commodity traders have not joined the recent equity rally, with oil prices remaining stubbornly above $100 per barrel. This divergence is a warning signal, as commodity markets are often better-informed about energy price directions. The Nasdaq had already fallen about 7.5% year-to-date, with a maximum drawdown of 12%, making it the worst start since 2022.
Market Outlook and Investment Advice
Berezin considers equities still expensive, trading at about 20 times forward earnings with profit margins at peaks. His preferred asset class for now is cash. For Europe and Japan, higher oil prices damage their terms of trade more severely than in the US, driving up recession probabilities. The US dollar benefits in the short run but faces structural headwinds: overvaluation, decades of current account deficits, and central bank diversification away from the dollar. Gold should benefit from this de-dollarization trend over the coming months and years.
Geopolitical Update
President Trump demands confiscating Iran's oil and opening the Strait, while Tehran has rejected a 45-day ceasefire. The April 8 deadline for a possible attack looms. Berezin believes a negotiated resolution remains the base case, but the power vacuum after the killing of key Iranian leaders makes a quick deal harder.
AI Disruption and IPO Insights
Berezin argued that AI disruption now extends beyond software and threatens social media companies. AI agents can deliver content directly to users, reducing the value of platforms like Instagram and YouTube. On AI hardware, he cited Caltech research showing significantly lower computational costs for large language models, comparing it to internet infrastructure: data transmission grew ~500,000% over 25 years, yet infrastructure spending fell as a share of GDP. AI might not require trillions in data center spending. This would be negative for copper and base metals in the short term but potentially positive long term as genuine productivity gains create demand for finite physical resources.
Regarding 2026 IPOs (SpaceX, OpenAI, Anthropic), Berezin favors Anthropic for its enterprise AI positioning and cost advantages, but warns that a wave of IPOs often signals sector peaks. He pushed back against Anthropic CEO Dario Amodei's warning that AI could eliminate half of entry-level service jobs, arguing that productivity gains translate into income gains in equilibrium and that fiscal/monetary policy would prevent sharp unemployment rises.