Oil prices are set to fall: U.S. Treasury Secretary names timeline for price drop
4 May 08:14
Global oil prices may begin to fall within the next three to nine months. U.S. Treasury Secretary Scott Bessent made this forecast during an appearance on Fox News, according to "Komersant Ukrainian"
According to him, the market could be influenced by an increase in supply, the UAE’s withdrawal from the oil alliance, and the gradual resumption of maritime traffic in the Persian Gulf.
Bassent stated that the futures market is already pricing in lower oil prices over the next three, six, and nine months.
What Scott Bessent said
The U.S. Treasury Secretary stated that oil prices may not fall immediately, but the market is already anticipating a gradual decline in the cost of crude.
“The UAE has decided that OPEC isn’t for them. Most monopolies eventually collapse under their own weight. This gives me great optimism; oil prices after this conflict will be significantly lower than they were… at the beginning of the year or at any point in 2020–2025… I think that oil prices… will be lower in three, six, or nine months,” Scott Bessent said.
According to him, there are hundreds of oil tankers in the Persian Gulf waiting for an opportunity to set sail. Bessent added that the U.S. is blocking only Iranian vessels, so he does not rule out that more and more ships will be able to leave the region.
Why oil prices may fall
The main factor that could influence the market is an increase in oil supply. According to Bessent, the United Arab Emirates’ withdrawal from the oil alliance could allow the country to boost production and bring additional volumes of crude to the market.
It should be noted that the UAE left OPEC on May 1, and the alliance itself has already agreed to another increase in production quotas for June.
At the same time, due to the closure of the Strait of Hormuz, the actual effect of such an increase may be limited for now.
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The Role of the Strait of Hormuz
The Strait of Hormuz remains one of the key factors for the oil market. A significant portion of global oil and gas supplies passes through it, so any blockage or restriction of tanker traffic quickly affects prices.
Oil prices fell slightly after Donald Trump announced that the U.S. was ready to assist ships stranded in the Strait of Hormuz area.
At the same time, Brent remained above $100 per barrel, as geopolitical tensions and supply disruptions remain serious risks.
The minister suggests that the issue with oil blocked due to tensions in the Strait of Hormuz will be resolved in the near future.
According to Bessent, hundreds of oil tankers are currently in the Persian Gulf awaiting the opportunity to set sail. At the same time, the official clarified Washington’s position on maritime traffic.
“The U.S. is blocking only Iranian vessels. And we’ll see—I wouldn’t be surprised if more and more ships set sail,” added the U.S. Treasury Secretary.
Why prices remain high for now
Despite Bessent’s forecasts, the oil market remains volatile. The closure or restriction of traffic through the Strait of Hormuz has already significantly impacted exports from the Persian Gulf.
According to Reuters, these disruptions pushed oil prices above $125 per barrel in the previous period and heightened fears of jet fuel shortages and inflation.
Therefore, even if supply gradually increases, a return to a stable market may take time. Analysts also warn that without a political resolution regarding Iran, prices may remain under pressure.
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