Escalating tensions tied to the Iran conflict are raising the probability of a broader global downturn, according to BCA Research chief global strategist Peter Berezin. In his latest public comments, Berezin said recession odds for the United States stand at 40%, while Europe and Japan are closer to 50%, largely because they are more exposed to the economic damage caused by higher energy prices. His central warning is straightforward: if disruption to global oil supply persists, crude could surge to $200 per barrel, amplifying inflation and squeezing growth across multiple regions at once.
Oil supply shock is the central macro threat
Berezin framed the oil market as the key transmission channel between geopolitical conflict and macroeconomic stress. He pointed to the Strait of Hormuz, through which roughly 20% of global oil supply passes, and said that around 10% of world supply is already being disrupted. Because oil demand is highly inelastic in the short run, prices may need to rise dramatically in order to force enough consumption destruction to balance the market.
That is why, in his view, a sustained reduction in global production of around 10% could push crude to $200 a barrel. The implication is not limited to gasoline or transportation costs. Higher oil prices would feed directly into a broad range of industrial and consumer inputs, including fertilizers, plastics, chemicals, and logistics. In other words, an energy shock of that magnitude would not remain confined to commodity markets; it would ripple through supply chains and eventually into corporate margins and household spending.
Berezin reinforced this point by recalling the worst phase of the pandemic, when global oil consumption dropped by roughly 20% amid empty roads and a collapse in economic activity. His argument was that even a much smaller but sustained disruption in supply can have an outsized effect on prices, especially when the physical infrastructure of global trade is concentrated in strategic chokepoints.
Commodity markets may be sending a stronger warning than equities
Although equity markets briefly rallied on reports of possible ceasefire discussions, Berezin expressed skepticism that the rebound would hold. He compared the stock market to a ball bouncing down a staircase: it may rise temporarily, but the broader trajectory still points lower. At the time of the interview, the Nasdaq was down about 7.5% year to date, with a trough decline of roughly 12%, marking one of the weakest starts to a year since 2022.
In his assessment, stocks remain expensive relative to the macro backdrop. He said equities were trading at around 20 times forward earnings while profit margins remained near peak levels, a combination that leaves little room for disappointment. Against that backdrop, he described cash as his preferred asset class for the time being.
One reason for his caution is the divergence between financial markets. While equity investors appeared willing to buy relief headlines, oil remained above $100 per barrel. Berezin argued that this disconnect matters because commodity traders are often more sensitive to physical supply risks and may therefore be pricing in a more serious scenario than stock investors currently recognize.
Europe and Japan appear more vulnerable than the U.S.
Berezin said the recession risk is even higher outside the United States, with Europe and Japan closer to 50%. The core reason is their greater vulnerability to worsening terms of trade when imported energy becomes more expensive. For these economies, a spike in crude prices can function like an external tax, draining purchasing power and weakening industrial competitiveness at the same time.
By contrast, the United States may receive some temporary support from the dollar in a high-oil-price environment. Still, Berezin cautioned that the dollar is not free of longer-term challenges. He cited several structural headwinds, including an expensive valuation based on purchasing power parity, decades of current account deficits, and an ongoing trend among central banks to diversify reserves away from the U.S. currency.
That reserve diversification trend, he said, could support gold over the medium and long term. Even if retail profit-taking causes near-term pullbacks, gold may continue to benefit as governments and central banks search for alternatives amid heightened geopolitical and financial fragmentation.
Negotiated resolution remains the base case, but near-term risks persist
On the political side, Berezin said a negotiated resolution to the Iran conflict remains his base case. However, he warned that the near-term path to compromise may be more difficult than markets expect. In his view, the killing of key Iranian leadership figures could create a power vacuum that makes de-escalation harder, not easier, because more hardline actors tend to gain influence in such environments.
This matters for investors because markets often price conflict risk around headline expectations of ceasefires or diplomacy, while underestimating how domestic political realignments can delay any durable settlement. If that delay keeps oil supply constrained, the economic consequences could continue to build even in the absence of a formally wider war.
AI, infrastructure spending, and IPO enthusiasm also came under scrutiny
The discussion also broadened to the technology sector, where Berezin argued that artificial intelligence is no longer disrupting only software. He suggested that AI agents could increasingly deliver information and content directly to users, reducing the value of social platforms as destinations and turning them more into content repositories than primary gateways.
On the hardware side, he referenced reporting on Caltech-related research indicating sharply lower computational costs for large language models. He drew an analogy to the history of internet infrastructure: data transmission exploded over the past quarter-century, yet infrastructure spending as a share of GDP ultimately declined. If AI follows a similar pattern, he said, the market may be overestimating how many trillions of dollars in future data center investment will actually be required.
Such an outcome would carry mixed implications for commodities. In the short run, it could be bearish for copper and other base metals if infrastructure spending expectations are revised lower. Over the longer term, however, a genuinely AI-driven productivity wave could still be supportive for physical resources, because stronger economic output eventually creates new demand for finite materials.
Anthropic was his preferred 2026 IPO candidate, with a caveat
When asked about potential 2026 IPO candidates such as SpaceX, OpenAI, and Anthropic, Berezin said that if he had to choose one, Anthropic would be his pick. He linked that preference to its position in business-oriented AI services and the potential benefits it could capture if model compute costs continue to fall.
Even so, he offered an important warning: a heavy wave of IPOs often coincides with a sector approaching a cyclical top. In that sense, enthusiasm around AI listings may be worth monitoring not only as a sign of innovation, but also as a possible indicator of late-cycle investor optimism.
Why the warning matters beyond traditional markets
For digital asset investors, the remarks are notable because they reinforce a broader macro theme: geopolitical shocks and energy-market stress can quickly alter global liquidity conditions, inflation expectations, and risk appetite. While Berezin’s comments focused on traditional assets, the message is relevant across markets. If oil continues to rise and recession odds move higher, investors may need to reassess exposures not only to equities and commodities, but also to higher-volatility sectors that are sensitive to shifts in global growth expectations.
The main takeaway from Berezin’s framework is that the conflict is no longer just a regional political story. In his view, it has become a macro event with the potential to reshape inflation, recession probabilities, reserve allocation, and market leadership across the rest of the year.