Fueling the Conception

Trump, his supporters complain and his opponents mock, has again “cowered” and fled from the war against Iran. Why? Because of the fear of a “micro” — a barrel of oil reaching the $100 mark and even beyond. With energy prices like these, it is “a given” that the world is headed for an enormous economic crisis, which will begin with America, where inflation is running wild and eroding the purchasing power of the working person. Trump sees, understands, and hesitates. Do you know this thesis? Of course. So let’s see how much truth there is in it.

It is true that in oil deals for immediate delivery, the price of a barrel reaches 85 and 90 dollars. Only this price refers to a small segment of the market — and it certainly does not herald a crisis. In January 2014, a barrel of oil traded at 100 dollars, equivalent to about 140 dollars today when accounting for the rise in prices since then. And in the fall of 2018, it was possible to buy a barrel of oil for 70 dollars, which is 100 dollars at today’s price level. Yet the economic world did not collapse, and neither did the United States.

And, unlike then, today America is benefiting from expensive oil, being a leading exporter of energy materials. The U.S. Treasury Department also benefits. In the economic data published in the United States recently, only a slight slowdown in the growth of the economy is visible in the second quarter of 2026. The annual inflation rate, in fact, slowed to 3.5%, the labor market continues to be tight — without unemployment — and the average wage (over $7,000 per month) maintains its real purchasing power.

The danger to the American economy lies in the deep deficit in the budget of the federal government, 6% of the gross domestic product, financed by massive issuances of government bonds that raise the already-high public debt even further. This is the legacy of budget expansion that was not accompanied by corresponding taxation, during the previous administration of President Biden and also in the current Trump administration.

All this does not prevent Americans from declaring in public opinion polls that “the economic situation” stands at the top of their concerns and will strongly affect their decision about who to vote for in the midterm elections in November for the Congress. In those same polls, only 4% of Americans care about foreign policy. This is not a new phenomenon. In democratic countries, voters tend — in polls — to translate their various concerns and hardships, social, personal, and political, into “the economy.” By contrast, experience shows that the extent of the influence of the real economic situation on actual voting patterns in practice is very limited.

If the American voter indeed punishes the Republican Party in the midterm elections, this would be a result of general disgust with the way President Trump is conducting himself as head of state, and not of accelerating (that is not accelerating) inflation and not of a decline in the standard of living (which is rising).

Extracting a barrel of oil from desert sands costs energy companies in the Persian Gulf on the order of magnitude of $10. The difference between extraction costs and the price of the barrel on markets is a tax that the governments of the Persian Gulf states funnel into their own pockets, the pockets of the ruling sheikhs and their family members.

Reducing the government tax could have lowered crude oil even after the crisis in the Strait of Hormuz, but the sheikhs prefer to preserve the distorted pricing system and, God forbid, not to be flexible.

“Every war is based on deception and goes astray,” wrote the wise man from China Sun Tzu in his work “The Art of War.” President Trump adopted this approach in two sudden military moves against Iran, and one in Venezuela. Therefore, when he and senior officials of his administration publicly declare/leak the supposed exact timing of a new imminent strike, including its targets and means, it is clear that they have no intention of a real war. It will break out, if at all, again at an unexpected time and in an unexpected manner, and while ignoring the “economic situation.”