Bessent says crude could fall to $40 after the Iran war while crack spreads keep pump prices high

Treasury Secretary Scott Bessent said crude could fall to as low as $40 a barrel once the Iran conflict ends, with a wave of new supply hitting an already oversupplied market. He said it in an interview with Steve Bannon that aired Friday. For fuel buyers, the number matters less than the timing, and Bessent gave none.

Bessent's $40 call

"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," Bessent said. He tied a lower barrel to lower bond yields, which have been at multi-year highs.

Two problems for anyone pricing that into a rack contract. Bessent set no date, and the war shows little sign of ending. A cheaper barrel could ease your cost of goods if it lands, but that is a forecast, not a supply commitment.

Why the pump stays high

Crude is not at record highs, yet gasoline is still expensive at retail. The gap is the crack spread, the difference between what a refiner pays for crude and what it gets for the finished fuel. When that spread is wide, pump prices hold up even when the barrel is flat or falling.

So Bessent's $40 crude, if it shows up, may not pass through to your customers cent for cent. Refiners capture the difference. The 3:2:1 crack tells you more about where street prices go next than the WTI screen does right now.

For jobbers, wide cracks cut both ways. Your product cost tracks the rack, and the rack tracks the crack as much as it tracks crude. A falling barrel with a fat spread still leaves you buying dear.

Zambia's Indeni

Zambia scrapped a planned $300 million investment in its Indeni refinery, fired the staff, turned the company into an oil marketer, and started selling off the machinery. It is a real closure, but it is one small plant that served a domestic market. Nothing here moves a US rack or a global benchmark. File it as a data point on refinery capacity thinning out around the world, and no more.

What to watch

The end date of the Iran conflict, since Bessent hung the whole $40 case on it. Crack spreads on gasoline and diesel, which are setting street prices more than crude is at the moment. Whether the new supply Bessent described actually reaches the market or stays a line in an interview.