The price of oil could rocket to $200 a barrel this year, triggering a flash crash in stock markets, according to Rathbones' David Coombs.
Coombs, head of multi-asset investments at Rathbone Unit Trust Management, said if current political tensions over Iran's nuclear programme escalate then the price of 'black gold' could surge to $200 a barrel.
"If Iran blocks the straits of Hormuz, I see oil possibly going to $200 and then down again," said Coombs. "It would be a short-lived but significant event which could see equities go down by perhaps 20%."
He added if the flash crash plays out it will create buying opportunities in sectors such as emerging markets.
The price of oil has been increasing recently on the back of rising political tensions over Iran's nuclear programme. Iran has threatened to close the Straits of Hormuz - a vital oil trade route in the Gulf - if the US and EU impose further economic sanctions.
Speculation Israel could be planning an attack on Iran's nuclear facilities has also raised concerns the Islamic state will retaliate by closing the straits.
Last week, Crude oil prices hit a 43-month high after Brent crude jumped $5.74 to $128.40 per barrel in New York following reports a Saudi Arabian pipeline had exploded.
Coombs thinks the escalating oil price poses the biggest threat to the global economy.
"The oil price keeps me awake at night," he said. "Europe does not because Europe is a known uncertainty. But a spike in oil would create huge uncertainty."
But Coombs, who runs three multi-manager funds, said despite the oil threat, he has been "really encouraged" by recent economic indicators.
He said the European Central Bank's Long Term Refinancing Operation (LTRO) - which allows banks to borrow cheaply whilst holding less collateral - has helped provide long-term stability to the banking sector and economy as a whole.
Coombs also pointed to healthier US bank balance sheets and an improved US housing market as further positives.
"The US economy is now growing and I think Europe will stagger through with its economy flat-lining" he said.
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