The billionaire founder and CEO of Citadel Securities warns that a global and US recession is on the table if the vital waterway for oil shipments remains closed for an extended period of time.
In a new interview with CNBC, Ken Griffin He says Oil prices are likely to rise to uncontrollable levels if Iran continues its blockade of the Strait of Hormuz, through which about 20% of global oil shipments pass.
“Unfortunately, we have not yet reopened the Strait, and that will take a period of time that is difficult to estimate or quantify. The result is that if the Strait remains closed for another six, nine, or 12 months, energy prices around the world will rise significantly. It will push the world into a global recession.”
According to Griffin, the United States is largely insulated from oil price shocks because it is a net exporter of oil. But he warns that a global recession will ultimately hurt the US economy.
“So we end up with a global recession. Obviously, this will hit U.S. growth expectations and may push the U.S. into a recession. But of all the countries in the world, we will have one of the greatest stories of resilience.”
But for now, Griffin says the US stock market appears to be ignoring geopolitical concerns as investors focus on a strong earnings season.
“Look, the stock market is looking forward to the amazing earnings success that corporate America has enjoyed. Another great earnings period so far. US companies in almost every sector are posting record profits. The stock market is very focused on the current success story being written across corporate America.”
As of Thursday’s close, the S&P 500 was trading at an all-time high of 7,337.
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