Bessent Sees Oil Plunging to $40 as Iran Conflict Ends

Treasury Secretary Scott Bessent expects oil prices to plummet once the Iran conflict is over, potentially dropping as low as $40 a barrel. This would lead to lower bond yields, which have recently hit their highest levels in years.

Brent crude was trading above $95 a barrel on Friday, while West Texas Intermediate was at about $91. The rise in energy prices has added to concerns about inflation, boosting yields on benchmark bonds around the world. Ten-year US rates this week hit their highest since 2023.

Bessent attributed the high correlation between oil prices and interest rates, stating that 'the Iran conflict will end, interest rates and the spike in headline inflation will come down.' He also played down Norway's proposal to cut back on its holdings of Treasuries, suggesting it would be a move to upgrade yield with other American assets.