Bessent Sees Oil Prices Plummet to $40 Following End of Iran Conflict

US Treasury Secretary Scott Bessent predicts that crude oil prices will plummet to as low as $40 per barrel once the Iran conflict reaches a resolution. Speaking to Bloomberg, Bessent emphasized that an influx of market supply will drive down energy costs and help alleviate pressure on sovereign bond yields.

The projection comes amid elevated energy markets following recent military exchanges between US and Iranian forces. Brent crude traded above $95 a barrel on Friday, reaching its highest level since July, while West Texas Intermediate hovered near $91.

Bessent pointed out a strong historical correlation between current oil prices and interest rate movements, reassuring markets that both inflation spikes and bond yields will decline as geopolitics stabilize.

He also addressed market nervousness regarding Norway's sovereign wealth fund's proposal to reduce its US government debt footprint by an estimated $75 billion. Bessent downplayed concerns about diminishing international demand for US Treasuries, suggesting the fund is simply reallocating capital to higher-yielding government-backed housing agency debt.