With the oil price rally continuing and barrels now trading at around $100, the Trump administration is reportedly examining potential impacts from prices doubling to as much as $200 per barrel, according to a Bloomberg source familiar with the matter. This clearly reflects that even at the highest levels, officials are studying possible scenarios from the war with Iran.
The simulation of consequences that higher oil prices would have on growth prospects is part of routine assessments conducted during periods of tension and does not constitute a forecast, the same sources clarified, requesting anonymity. The process aims to ensure the government is prepared for every contingency, including a prolonged conflict.
Even before the war erupted, US Treasury Secretary Scott Bessent had expressed concerns that the conflict would lead to rising oil prices and burden economic growth. Senior Treasury officials have conveyed concerns to the White House in recent weeks about oil and gasoline price volatility.
White House denies – “No consideration of oil reaching $200 per barrel”
However, White House spokesperson Koos Desai characterized this information as “inaccurate,” emphasizing that “while the government continuously assesses different price scenarios and their economic impacts, there is no consideration of oil reaching $200 per barrel, and Secretary Bessent has not expressed concern about short-term disruptions from Operation Epic Fury.” He added that Bessent has repeatedly “expressed confidence, as has the administration, in the long-term trajectory of the American economy and global energy markets.”
Oil prices have skyrocketed since the US and Israel attacked Iran on February 28, with American West Texas Intermediate crude strengthening approximately 30%, reaching $91 per barrel. Brent has recorded a nearly 40% increase over the same period, trading around $102.
The White House stated Wednesday that diplomatic efforts to end the war continue, despite Iran’s public rejection of Trump’s proposal for talks and threats of further military action if no agreement is reached. On Monday, Trump set a five-day deadline for Tehran to begin negotiations.
The administration had initially estimated the military operation would last 4 to 6 weeks, while Energy Secretary Chris Wright had stated on March 12 that a price jump to $200 per barrel was “unlikely.”
Such a price level would constitute a shock to the global economy. In inflation-adjusted terms, oil has reached these levels only once in the past 50 years — in 2008, just before the global financial crisis.
Even at lower levels, estimates show that prices around $170 per barrel for a few months would boost inflation in the US and Europe and slow economic growth.
Trump has stated he is not worried about rising energy costs, even arguing it could benefit the US, and believes prices will fall significantly after the war ends.
However, the near-complete disruption of transport through the Strait of Hormuz — through which approximately one-fifth of global oil and natural gas exports pass — has already caused impacts on economies worldwide.
European Central Bank President Christine Lagarde warned last week that hostilities are enhancing inflationary risks, while central banks in Frankfurt, London and Japan are preparing for possible interest rate increases even as early as next month.
US: 30% increase in retail gasoline prices
In the US, the most visible impact is the 30% increase in retail gasoline prices, erasing the previous year’s reductions that Trump had promoted as a key economic achievement.
The landscape for monetary policy in the US is becoming increasingly unclear as the Federal Reserve monitors the effects of rising oil prices on inflation. Last week, its chairman Jerome Powell stated it was still too early to assess the consequences of rising oil prices on the American economy.
