$40 Oil Looms as Bessent Sees End of Iran Conflict

Treasury Secretary Scott Bessent believes oil prices could plummet to $40-$50 per barrel once the Iran conflict ends. He expects a surge in global supply to reverse the energy-price shock that has pushed U.S. diesel to a record high and contributed to rising inflation and bond yields.

Brent crude traded above $95 a barrel on Friday, near its highest level since July, while U.S. benchmark West Texas Intermediate was around $91 following renewed military exchanges between Washington and Tehran this week. The yield on 10-year U.S. Treasury securities reached its highest level since 2023 this week.

Bessent argued that the relationship between oil prices and interest rates has become unusually strong and predicted that both inflation and bond yields would fall once the conflict ends and energy costs retreat. However, his forecast contrasts sharply with current market conditions and depends on an end to hostilities, normalized energy transit, expanded production, and sufficient additional supply to create the oversupply he expects.