Trump warns of possible strike on Iran, copper prices drop 1%, oil prices surge

Geopolitics is starting to drive the direction of the metals market, and shifts in market sentiment are happening rapidly. After Donald Trump warned that if negotiations fail, the U.S. could launch an “extremely severe” strike at Iran within the next two to three weeks (possibly targeting civilian infrastructure such as power plants), industrial metals prices fell. Although Trump also said a military action is “very close” to being completed, the risk of renewed escalation appears to be driving commodity price divergence—oil futures are rising, while metals prices closely tied to the growth cycle are weakening.

Copper is often viewed as a real-time gauge of global industrial momentum. It fell 1% on the London Metal Exchange to $12,306 per ton, extending a trend that has already been marked by extreme volatility—after copper prices logged the largest monthly drop since 2022. Aluminum fell 0.7% and zinc fell 0.8%, reversing some of the gains earlier attributed to supply disruptions in the Middle East (including a report that after Iran strikes, a smelter at one of UAE’s plants operated by United Arab Aluminum is shut down). The market backdrop is becoming increasingly fragile: supply shocks may provide intermittent support, but if global growth expectations cool, rising energy costs and uncertainty brought by the war could begin to weigh on demand.

The current broader macro focus appears to be centered on the Strait of Hormuz—an important shipping corridor for global oil and LNG. Trump urged allies that rely on Middle East energy to help address the risk of the strait facing near closure, further reinforcing the close link between metal prices and oil prices. According to market commentary, if oil prices continue to rise while central banks in various countries turn toward looser liquidity, base metals may face pressure from damaged demand, keeping prices under strain even amid ongoing supply disruptions.

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Responsible editor: Zhang Jun SF065