US Treasury Secretary Scott Bessent projected that global oil prices could decline to $40 or $50 per barrel following the resolution of the Iran conflict. He attributed this potential price compression to a significant surge in supply entering the market once geopolitical constraints ease.

Supply Dynamics and Price Outlook

In an interview on Fox News, Bessent stated that the current energy supply shock is temporary. He argued that resolving the conflict would unlock constrained supply, leading to a steep drop in prices. The Treasury Secretary emphasized that the US economy is undergoing a productivity burst and remains resilient, citing solid job and wage growth.

Bessent also highlighted structural changes in global energy logistics. He predicted that the strategic importance of the Strait of Hormuz would diminish as Gulf nations develop alternative pipeline routes. This shift, he noted, would reduce Iran's ability to disrupt oil flows, a capability he previously identified as an energy choke point for many nations, though not for the US.

Market Reaction and Contrasting Views

Economist Peter Schiff publicly dismissed Bessent's outlook. On X, Schiff wrote, "Don't believe anything this guy says. I don't think he believes what he is saying either." This skepticism contrasts with earlier comments from BlackRock CEO Larry Fink, who aligned with Bessent's view that oil could crash below $50 if Iran is neutralized and its supply returns to global markets.

However, Fink also warned of a bearish alternative scenario. He noted that if the conflict continues and Iran remains a threat to global energy supplies, oil prices could stay elevated for years, potentially reaching $150 a barrel. Such an outcome would have severe consequences for the global economy.

What the Numbers Show

The divergence between current market pricing and executive projections highlights significant uncertainty in energy markets. With Brent crude trading at $97.03 and WTI at $91.87, both benchmarks are trading well above the $40-$50 range predicted by Bessent and Fink under a resolution scenario. The gap suggests that market participants are currently pricing in prolonged geopolitical risk rather than an imminent supply flood.

Trading Activity

On Friday, United States Brent Oil Fund (NYSE: BNO) rose 0.38%, while ProShares Ultra Bloomberg Crude Oil (NYSE: UCO) climbed 1.24%. In contrast, the United States Oil Fund (NYSE: USO) fell 0.091%.

Global oil prices rose sharply after the US struck three Islamic Revolutionary Guard Corps crude oil tankers and Iran moved to restrict shipping outside the Strait of Hormuz. Brent crude traded near $97 and WTI around $92 amid fears of prolonged supply disruptions.

Market reaction and supply concerns

The escalation in tensions has pushed benchmark prices higher. Brent crude trades near $97, while West Texas Intermediate (WTI) is around $92. Current flows through the Strait of Hormuz remain below normal levels. Analysts note that further escalation could push Brent toward $100, adding to global inflation pressures.

Operations against IRGC tankers

U.S. Central Command permanently disabled two Islamic Revolutionary Guard Corps crude oil carriers and completely destroyed a third. The military action targeted what it described as a multibillion-dollar shadow network funding the IRGC and its regional proxies.

The following table summarises the operations carried out against each tanker:

Details of the strike on M/T Kylo

The M/T Kylo, also known as the Noxen, was an unladen crude oil carrier struck in multiple critical locations. Before the vessel was destroyed, the crew was directed to abandon ship. U.S. Central Command described the operation as targeting a key component of the IRGC's logistics infrastructure.

Shadow network funding the IRGC

U.S. Central Command characterised the three tankers as part of a multibillion-dollar shadow network that funds the IRGC and its regional proxies. The military framed the strikes as an effort to disrupt this financing structure by neutralising vessels integral to the network's crude oil transport operations.