Bessent Sees Oil Prices Plummeting After Iran Conflict Ends

Treasury Secretary Scott Bessent predicts that oil prices will plummet to as low as $40 a barrel once the Iran conflict is over, significantly reducing bond yields. He believes that after the conflict ends, the global oil market will be oversupplied, leading to a sharp decline in crude prices.

Brent crude was trading at around $95 a barrel on Friday, its highest level since July, while West Texas Intermediate was at about $91. The recent rise in energy prices has added to concerns about inflation, causing yields on benchmark bonds to increase worldwide. Ten-year US rates have hit their highest level since 2023.

Bessent notes that there is a high correlation between oil prices and interest rates, stating 'If you go and look, the interest rates, this is the highest correlation they've ever had to the oil price.' He believes that once the Iran conflict ends, interest rates and headline inflation will decrease.