Recession risks rise for global economy

ON THE eve of the US and Israeli military campaign against Iran just under four weeks ago, the outlook for the global economy was relatively benign. Today, recession risks are rising in what the International Energy Agency (IEA) calls the greatest ever shock to the vast global energy sector.

The rapidly deteriorating outlook is even being called an “armageddon scenario” for the energy landscape. Goldman Sachs last week warned that “the persistence of several prior large supply shocks underscores the risk that oil prices may stay above US$100 for longer in risk scenarios with lengthier disruptions and large persistent supply losses”.

While this is alarming enough for the global economy, Iran has determined that it faces an existential threat and seems to have decided that its best course of action is to inflict as much pain as possible on global financial markets. It has vowed to try to cause the price of oil to soar to US$200 a barrel if the war with the US and Israel continues.