US Treasury Secretary Scott Bassett expressed the view that oil prices could significantly decrease after the conclusion of the conflict with Iran, potentially falling to $40 per barrel. He also believes that such a decline would help reduce inflationary pressure and could lead to a substantial drop in US bond yields following recent increases.
During an interview with Bloomberg TV on Friday, Bassett noted that a significant increase in supply could emerge in the oil market after the resolution of the Iranian conflict. He expressed hope for lower oil prices, suggesting that increased production could bring crude oil prices down to $50 or even $40 per barrel. However, he did not specify when the military confrontation might end.
These statements came against the backdrop of the constant influence of military clashes between the US and Iran on energy markets. On Friday, Brent Crude traded above $95 per barrel, approaching its highest level since July, while West Texas Intermediate was around $91. The recent rise in oil prices occurred after military attacks between the US and Iran.
This rise intensified inflation concerns, as higher energy costs can affect consumer prices. Rising inflation expectations also contributed to an increase in government bond yields. This week, the yield on 10-year US Treasury bonds reached its highest level since 2023.
Bassett emphasized that the link between oil prices, inflation, and interest rates has now become clear. Once the conflict with Iran ends, oil prices will drop sharply, and inflation will decrease. However, he added that the timeline for oil price reduction remains uncertain, as there are no clear signs of an imminent cessation of hostilities.