Bessent Sees Oil Prices Plummeting to $40 After Iran Conflict Ends

US Treasury Secretary Scott Bessent believes that crude oil prices will plummet once the Iran conflict ends. Speaking in an interview, he said oil could drop as low as $40 a barrel due to increased supply. This, he expects, will lead to lower bond yields, which have been rising due to inflation concerns.

Brent crude was trading above $95 a barrel on Friday, while West Texas Intermediate was at around $91. Bessent noted that oil prices and interest rates have historically had a high correlation. He is confident that once the Iran conflict subsides, both energy prices and bond yields will decrease.

The Treasury Secretary also downplayed the impact of Norway's sovereign wealth fund potentially cutting back on its US Treasury holdings. According to Bessent, Norway's move would merely be an attempt to upgrade their yield by investing in other American assets like Fannie Mae, Freddie Mac, or Ginnie Mae paper.