US Treasury Secretary Expects Oil to Drop to $40 After Conflict with Iran Ends - Sarmad

US Treasury Secretary Scott Bessent predicted that oil prices would fall to between $40 and $50 per barrel once the military conflict with Iran ends, as market stability returns and global supplies increase.

In a television interview aired on Friday, Bessent said that the easing of tensions would lead to an influx of additional crude oil into the markets, likely creating a significant supply surplus that would weigh on prices.

He added that the decline in energy prices would ease inflationary pressures and lead to a drop in yields on US Treasury bonds, which had recently risen due to concerns about the impact of higher oil prices on borrowing costs.

Bessent’s forecasts come as crude prices continue to rise amid risks surrounding energy supplies and navigation through the Strait of Hormuz. Brent crude stabilized near $95.62 per barrel, after touching $97.60 earlier in the week, while West Texas Intermediate (WTI) crude traded near $91.22 per barrel.

In financial markets, the yield on 10-year US Treasury bonds rose to a range of 4.79% to 4.82%, while spot gold fell 1.1% to $4,419.09 per ounce, weighed down by higher yields and a stronger US dollar.

Bessent’s outlook is tied to a reduction in geopolitical risk premiums in the oil market, with their realization contingent on the trajectory of the conflict and the return of supply flows and navigation to normal levels.