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

U.S. Treasury Secretary Scott Bessent has made a bold prediction about oil prices and their impact on bond yields. In an interview with Bloomberg, he stated that once the Iran conflict ends, global crude oil prices could plummet to $40 per barrel, causing bond yields to follow suit.

Bessent attributed the recent surge in bond yields to rising energy prices, citing a historic linkage between oil prices and interest rates. He pointed out that the correlation between oil prices and interest rates has reached an all-time high, with the 10-year U.S. Treasury yield recently climbing to levels not seen since 2023.

Bessent's forecast stands in stark contrast to current market pricing, which has Brent Crude trading above $95 per barrel and West Texas Intermediate hovering around $91. He emphasized that once the Iran situation eases and oil prices retreat, inflationary pressures will subside, and benchmark bond yields will follow lower.