Trump ally warns US economy cannot withstand Iran war-driven oil spike

The prolonged US-Isreal war with Iran is exerting mounting pressure on oil prices, US inflation and the broader economy. A US economist and ally of President Donald Trump has warned that the American economy is not strong enough to withstand a surge in oil prices.

E.J. Antoni, chief economist at the Heritage Foundation and a former nominee to lead the Bureau of Labor Statistics, said the US economy would struggle to cope with oil prices reaching $100 per barrel.

"I don't think this is an economy that is going to be able to handle $100 a barrel for oil, it's just not," E.J. Antoni told the Financial Times.

"The economy is weaker than we thought it was, and inflation is worse than we thought it was," he said on Wednesday ahead of the Federal Reserve's March rate-setting meeting.

"The lower energy prices that we saw in 2025 helped put downward pressure on prices throughout the economy. Now . . . we're going to see higher energy prices have exactly the opposite effect and put upward pressure on prices throughout the economy." Antoni also highlighted sluggish job growth, attributing it in part to federal government layoffs last year.

Antoni is a leading figure at the conservative think tank the Heritage Foundation and has been involved in shaping policy proposals linked to the Republican "Project 2025" agenda.

Later on Wednesday, the Federal Reserve announced it would keep interest rates unchanged. Federal Reserve Chair Jerome Powell said at a press conference that the net effect of the oil crisis would be "downward pressure on spending and employment, and upward pressure on inflation," adding that the scope and duration of the Middle East situation's impact on the US economy remain uncertain.