US Treasury chief predicts gas prices to drop below pre-war levels when conflict ends

Treasury Secretary Scott Bessent told a Senate subcommittee Wednesday that US gasoline prices could drop below pre-war levels once the conflict with Iran concludes.

“I can tell you that it is my belief that when we talk about gasoline, that the crude market is currently in what is known in the energy business is very steep backwardation,” said Bessent, explaining that future prices currently sit much lower than present rates.

He predicted that as hostilities end, fuel costs will return to previous levels, "or perhaps lower."

Sanctions, market supply

Bessent faced sharp questioning about the administration's decision to ease sanctions on Iranian and Russian oil.

Sen. Chris Coons expressed concern that Iran has gained $14 billion in revenue since the war began in late February, while Russia earns an extra $150 million a day to fund its military efforts in Ukraine.

Bessent dismissed the $14 billion figure as a "myth," asserting that he "couldn't disagree more" with the premise that the relief was counterproductive. He argued that the move prevented a global price surge, noting that without the adjustment, oil prices could have spiked to $150.

“Just as you are concerned about gasoline prices for the American consumer and for our Asian allies, as are we,” he said, adding that the policy ensured the world remained "well supplied" with 250 million barrels of oil.

Addressing the administration’s decision to extend Russian sanctions relief for 30 days, Bessent explained that he was moved by pleas from more than 10 of the world's "most vulnerable and poorest countries" regarding energy security.

The US and Israel launched an offensive Feb. 28, forcing Iran to retaliate with strikes across the region and restricting oil flows through the Strait of Hormuz, rattling global markets.

UAE's swap request

Sen. Chris Van Hollen questioned Bessent about a request from the United Arab Emirates for a currency swap line through the Exchange Stabilization Fund. The senator raised concerns about potential links to the business interests of the family of US President Donald Trump.

Bessent disputed the suggested connections, clarifying that "many of our Gulf allies" and some Asian countries have requested swap lines to "maintain order and the dollar funding markets." He argued that such lines, whether provided by the Treasury or the Federal Reserve, prevent the "disorderly" sale of US assets and benefit Washington and its partners.

Trump said Tuesday that he was open to providing financial support for Abu Dhabi. "If they had a problem, I will literally be there for them," he said.