On Wednesday, rumors that "the Trump team is studying the impact of oil prices soaring to $200" once again left many investors in the crude oil market feeling jittery, although the White House quickly denied it thereafter...

According to earlier statements from informed sources, officials in the Trump administration are assessing the potential economic impact if oil prices surge to $200 per barrel, indicating that senior White House officials are studying the potential ripple effects of extreme scenarios in the Iran war. These sources noted that modeling the extent of damage that a sharp rise in oil prices could inflict on economic growth prospects is part of routine assessments during periods of heightened tensions and is not a prediction.

They stated that this move aims to ensure the government is prepared for all contingencies, including prolonged conflict.

Informed sources also revealed that even before the outbreak of the war, U.S. Treasury Secretary Bessent had expressed concerns that the conflict would drive up oil prices and harm economic growth. Over the past few weeks, senior Treasury officials have also been conveying their concerns about oil and gasoline price fluctuations to the White House.

However, White House spokesperson Kush Desai later quickly dismissed this claim as "false." He pointed out, "While the government has been assessing various price scenarios and their economic impacts, officials have not discussed the possibility of oil prices reaching $200 per barrel, and Treasury Secretary Bessent is not 'concerned' about the short-term disruptions caused by 'Operation Epic Fury.'"

Desai noted that Bessent has repeatedly "conveyed his personal and the administration's continued confidence in the long-term trajectory of the U.S. economy and the global energy market."

The White House also stated on Wednesday that, despite Iran publicly rejecting President Trump's proposal for negotiations and threatening further military action if no agreement is reached, diplomatic efforts to end the war are still ongoing.

Iran's Threat of $200 Oil Prices Lingers

It is worth noting that Iran had already warned the U.S. in mid-March, threatening to push oil prices above $200.

On March 11, a spokesperson for Iran's Khatam al-Anbiya Central Command stated that Iran is fully capable of blockading the Strait of Hormuz. Western attempts to suppress global oil and energy prices through external intervention are doomed to fail. "Prepare for oil prices to rise to $200 per barrel, because oil prices depend on regional security, which you have undermined."

Since the U.S. and Israel attacked Iran on February 28, oil prices have indeed risen sharply—though they remain far from the $200 mark. The global benchmark Brent crude futures price has increased by nearly 40% since the outbreak of the war, trading around $99 on Thursday.

If crude oil prices were to reach $200, it would undoubtedly have a significant impact on the global economy. Adjusted for inflation, oil prices have only reached this level once in the past half-century, just before the outbreak of the global financial crisis in 2008.

In fact, even if the rise in oil prices ultimately proves less extreme, the impact of high oil prices on the global economy cannot be underestimated. A survey last week showed that when asked how high oil prices would need to climb for the probability of a recession to exceed 50%, economists provided answers ranging from $90 to $200 per barrel, with an average of $138.

Trump has stated that he is not worried about rising energy costs, even suggesting it could benefit the U.S., and predicted that oil prices would fall sharply once the war ends. However, the near-stagnation of traffic through the Strait of Hormuz—which typically handles one-fifth of the world's oil and gas exports—has already had a noticeable impact on the global economy.

European Central Bank President Lagarde said last week that hostilities in the Middle East have heightened inflation risks. The European Central Bank, the Bank of Japan, and even the Bank of England could raise interest rates as early as next month. In the U.S., the most direct impact has been a 30% increase in retail gasoline prices, erasing the declines seen over the past year—which Trump had touted as a key economic achievement. As the Federal Reserve closely monitors the impact of rising oil prices on inflation, the outlook for its monetary policy is becoming increasingly uncertain.

A recent Ipsos poll released this week shows that, due to soaring fuel prices and widespread public dissatisfaction with the Iran war he initiated, President Trump's approval rating has fallen to its lowest point since his return to the White House. Currently, only 36% of Americans approve of Trump's job performance, down from 40% in last week's poll.