Bessent Forecasts Oil Drop to $40 Once Iran Conflict Ends

U.S. Treasury Secretary Scott Bessent forecast on Friday, September 4, a drop in crude oil to $50 per barrel, or possibly $40, once the conflict with Iran concludes, citing an expected supply surplus over demand. The statement, made in an interview with Steve Bannon, was reported by Bloomberg and El Financiero.

Brent crude was trading above $95 per barrel on Friday, near its highest level since July, and West Texas Intermediate was hovering around $91, following military strikes between the United States and Iran earlier in the week, according to data reported by El Financiero. The recent energy rally pushed the yield on the 10-year U.S. Treasury note to its highest level since 2023 and stoked inflation concerns. For Mexico, the fuels it imports from the U.S. Gulf, primarily gasoline and diesel, are priced against international crude benchmarks, so the level Bessent projects is directly tied to the cost of those purchases.

"We are going to get through this conflict with Iran and I expect oil to come down," Bessent said in the interview broadcast on Friday, according to El Financiero. "After this we are going to have an oil supply far in excess of demand. We could see crude at $50, maybe $40, simply because so much production is coming to market," he added. "If you look at interest rates, they have never had such a high compensation relative to the price of oil," he said. In the same conversation, Bessent downplayed the Norwegian sovereign wealth fund's proposal to reduce its U.S. Treasury bond holdings by roughly $75 billion.

Bessent offered no timeline for the end of the conflict. While it continues, Brent remains above $95 per barrel, a level that continues to set the cost of the gasoline Mexico imports from the U.S. Gulf. The figure to watch in coming sessions is whether crude confirms the decline the secretary projected.

This article was written with artificial intelligence assistance based on verified sources and reviewed by a human editor before publication.