Treasury Secretary Scott Bessent said Thursday Iran’s main oil export terminal at Kharg Island has not loaded a single tanker in three days, citing satellite imagery, and predicted the crude spike will reverse quickly.

Prediction market traders disagree.

Speaking on CNBC from Beijing, Bessent said Iranian storage is full and production is about to shut in. Oil is currently trading above $100 a barrel after President Trump’s blockade choked off Iranian exports.

Bessent Calls The Spike Fadeable

Bessent pointed to the oil futures curve, where prices six to nine months out are substantially lower than today’s, as evidence the market itself expects the spike to unwind. He also said the UAE is pumping aggressively and the US is at record production.

“Nothing is more transitory than a supply shock,” Bessent said, drawing a contrast with COVID-era inflation he attributes to fiscal policy financed by central bank debt purchases.

Exxon Mobil (NYSE:XOM) and Chevron (NYSE:CVX) have rallied on the Iran disruption, while the United States Oil Fund (NYSE:USO) has tracked the WTI move.

Iran Is “On Its Last Legs”

Bessent’s conviction that the spike will fade is rooted in what he described as the total internal collapse of the Iranian regime. “We believe we’re at the point where soldiers aren’t getting paid, they’re not able to replenish their weapon stocks from abroad, so I think that they are on their last legs,” Bessent said.

He added that recent leadership decapitations have left a vacuum where it is “very tough” to find an Iranian official capable of negotiating.

China, which Bessent said had been buying about 90% of Iran’s oil exports before the blockade, has a strong incentive to work behind the scenes to reopen the Strait, he added.

Polymarket Traders Are Betting Against Him

Traders on Polymarket are pricing a 9% probability that Strait of Hormuz traffic returns to normal by the end of May, and a 46% chance by July 31.

Lloyd’s List Intelligence recorded just 40 vessel crossings in the week to May 3, against a pre-war average of around 120 transits per day.

Polymarket traders think there is a 34% chance of a permanent peace deal by June 30th, and a 63% chance of one by year end.

Inflation Read-Through

Bessent acknowledged hot recent prints, with April CPI rising 3.8% year-over-year, but said core inflation was falling before the Iran conflict began and will resume falling once energy normalizes.

Kalshi traders are pricing a 39% chance inflation breaches 5% this year and a 23.4% chance it hits 5.5%, with the implied peak forecast climbing to 4.9%, well above the current 3.8% print and rising.

The Treasury Secretary said the market may see “one, two more hot inflation numbers” before substantial disinflation kicks in, comments that arrive as Kevin Warsh prepares for his first meeting as Fed Chair after a 54-45 Senate confirmation.

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