US Treasury Secretary Scott Bessent sees crude oil as low as $40 post-Iran war, lower bond yields

Treasury Secretary Scott Bessent said oil prices will nosedive to as low as $40 a barrel once the Iran conflict is over, pulling down bond yields that have lately hit the highest levels in years.

“We’re going to get on the other side of this Iran conflict, and I expect that oil will come down,” Bessent said in an interview with Steve Bannon that aired Friday. “We’re going to be very much oversupplied in the oil market after this. We can see $50, $40 crude maybe, just because there’s so much coming online,” he said.

Bessent didn’t offer a timeframe for the conclusion of the war, which shows little sign of concluding anytime soon. One Republican lawmaker on the House Armed Services Committee this week described the military situation as “stalled.”


Brent crude was trading above $95 a barrel on Friday — around the highest levels since July — with West Texas Intermediate at about $91, in the wake of military strikes between the US and Iran earlier this week. The rise in energy prices in recent weeks has added to concerns about inflation, boosting yields on benchmark bonds around the world. Ten-year US rates this week hit their highest since 2023.

“If you go and look, the interest rates — this is the highest correlation they’ve ever had to the oil price,” Bessent said. “The Iran conflict will end, interest rates and the spike in headline inflation will come down.”

Norway’s Move

The Treasury chief also played down the importance of a proposal by Norway’s sovereign wealth fund, one of the world’s largest such institutions, to cut back on its holdings of Treasuries. The proposed move by the fund could imply holdings of US Treasuries dropping by $75 billion, according to Bloomberg analysis.

“They’re just looking to upgrade their yield with other American assets,” Bessent said. If Norway’s fund is looking to buy Fannie Mae, Freddie Mac and Ginnie Mae paper, “I am the biggest advocate for that,” he said.

Fannie and Freddie are two US-government chartered home-lending giants. Ginnie Mae is another federal housing-finance agency. Their bonds typically offer a premium over Treasuries.

The Norwegian news risked adding to concerns about investor appetite for US government debt at a time of outsized borrowing. One metric of federal debt just passed a record $40 trillion.