Key insights
- Treasury Secretary Bessent anticipates lower energy prices later in the year despite current increases due to the Middle East conflict. Rising gasoline prices, up over 40% since late February, contribute to inflationary pressures. Conflict-related shipping restrictions through the Strait of Hormuz exacerbate the situation. While US energy companies are increasing rig counts, the overall outlook suggests potential relief in energy costs, posing a slightly bearish signal for energy sector equities but potentially bullish for consumer discretionary.
Investing.com -- U.S. Treasury Secretary Scott Bessent stated Sunday that energy prices are expected to decline later in the year, despite current increases linked to the U.S.-Israel conflict with Iran.
"Oil prices on the other side of this conflict are going to be much lower," Bessent said during an appearance on Fox Business Network's "Sunday Morning Futures" program.
Energy prices have been rising as the conflict continues, but Bessent anticipates a reversal once the situation resolves.
The average U.S. gasoline price climbed to its highest level in nearly four years on Tuesday, following the U.S. and Israeli attacks on Iran in late February, according to American Automobile Association data.
Average prices at the pump increased 7 cents to $4.18 per gallon on Tuesday, marking the largest single-day rise in over a month, AAA data showed. Gasoline prices have surged $1.19 per gallon, or more than 40%, since late February.
Energy costs have soared amid Middle East conflict that has restricted shipping traffic through the Strait of Hormuz, a critical waterway that handles about one-fifth of global oil and gas supplies.
U.S. energy companies added oil and natural gas rigs for a second consecutive week, marking the first back-to-back increase since mid-March, according to data released Friday by energy services firm Baker Hughes.