Sir Richard Branson, the billionaire airlines-to-mobile phones tycoon, today warned that any conflict between the West and Iran could push oil prices over $100 a barrel and trigger “the biggest recession we have ever seen”.
The remarks recall those from analysts at Goldman Sachs, the Wall Street bank, who suggested last year the oil market was entering a “super-spike” period that could see 1970’s-style price surges as high as $105 a barrel.
Sir Richard suggested military intervention in Iran by the United States could tip the markets into such a bull run. International concerns over Iran’s nuclear programme, championed by the country’s hard-line President Mahmoud Ahmadinejad, have already risen sharply in the past month.
But Sir Richard told Times Online that any military action against the world’s fourth-largest oil producer would prove “disastrous” for the world economy.
Advertisement
“It is the one possibility on the horizon which really worries me. The economic fall-out from an attack on Iran would be crippling, not to speak of the human costs of any conflict,” he told Times Online from the World Economic Forum in Davos.
Washington and Whitehall have so far sought to talk down the possibility of a military strike on the Middle Eastern state. But oil prices have continued to test record highs in recent months, largely on the fraught geopolitical situation in the region.
Oil prices, which started 2005 at around $42 a barrel, reached $70 in September as a series of hurricanes hit the Gulf of Mexico and disrupted supplies. The average price through 2003 was just $29.
Spikes in the market mean Sir Richard’s Virgin Group is spending around $600 million to $700 million a year more on fuel costs than it did in 2003, a factor he admitted had “focused the mind somewhat” as he called on delegates at Davos, one of the world’s leading gatherings of business an political figures, to renew efforts to develop alternative energy sources.
“We have to hope that what Sheikh Yamani [the former head of Opec] feared 20 years ago is true: that high oil prices will force users to look for alternatives” he said.
Advertisement
“We all have a responsibility. Companies need to look at investing in cleaner energy sources. Individuals need to think about double-glazing.”
Sir Richard was also critical of the efforts of the major oil companies, which he said they had so far “only dabbled” in exploring green energy sources and had placed more emphasis on marketing spin than on research budgets.
Sir Richard said: “These companies have a real responsibility to pump money into projects such as ethanol-based fuels. If they did not make progress, they risk governments taking up the issue and coming down on oil companies hard.”
Virgin Fuel, part of Sir Richard’s Virgin Group, which also spans fuel-intensive businesses such as air travel and trains, has invested in the development of “clean” ethanol-based fuels.