US Treasury Secretary Scott Bessent stated that global oil prices are poised for a significant decline, potentially stabilizing between $40 and $50 per barrel, once the military conflict with Iran concludes and stability returns to energy markets. Bessent explained, in
a televised interview, that the abatement of geopolitical tensions would open the door for additional crude supplies to flow into markets. This influx would create a substantial surplus in supply, putting clear downward pressure on prices and leading to increased
global supplies. The Secretary also noted that a drop in energy prices would contribute to easing inflationary pressures and positively impact US Treasury bond yields, which have recently seen an increase. This previous rise was attributed to concerns about the effects
of rising oil prices on borrowing costs. These projections come at a time when global oil markets are experiencing continued price hikes. This ongoing ascent is attributed to risks surrounding energy supplies and navigation operations in the strategic Strait of Hormuz.
Brent crude reached levels near $95.62 per barrel, after touching $97.60 during the week, while West Texas Intermediate (WTI) crude traded close to $91.22 per barrel. Concurrently, financial markets witnessed an increase in the yield on 10-year US Treasury bonds, reaching
a range between 4.79 and 4.82 percent. In contrast, spot gold fell by 1.1 percent, settling at $4419.09 per ounce, influenced by rising yields and the strength of the US dollar. Bessent indicates that the realization of these forecasts is closely
linked to the subsidence of the geopolitical risk premium affecting the oil market. The trajectory of the conflict and the return of oil supply flows and navigation to normalcy remain crucial factors in determining whether these predictions will actually materialize.
