Copper, base metals slide as US-Iran crisis reignites

Base metals including copper came under pressure on Monday as a fresh escalation in US-Iran hostilities reignited concerns about global economic growth and the outlook for industrial demand. The pullback in growth-sensitive commodities came after Iran again declared the Strait of Hormuz closed, raising the specter of prolonged disruption to global trade and higher energy costs that could weigh on manufacturing activity worldwide.

Strait of Hormuz Crisis Deepens

The latest flare-up followed a weekend of military strikes, with the U.S. launching a third round of attacks against Iran on Saturday after the Islamic Revolutionary Guard Corps struck a Cyprus-flagged container ship, GFS Galaxy, for using what Tehran called an "unauthorized route" through the strait. One crew member is missing, and the vessel sustained damage to its engine room, according to U.S. Central Command.thehill

Iran responded by announcing it was again closing the waterway, which carries roughly a fifth of the world's oil supply. The closure marks yet another reversal in the volatile status of the strait, which has been contested since the broader US-Iran conflict erupted earlier this year. A memorandum of understanding signed on June 17 had briefly reopened the passage, but ship traffic remained far below pre-war levels, averaging just 28 vessels a day compared to normal flows.aljazeera+3

Fed Hawkishness Adds Headwinds

The geopolitical turmoil compounded existing concerns about monetary policy. Minutes from the Federal Reserve's June meeting, released last week, revealed that policymakers remain deeply divided on the rate path but increasingly open to raising interest rates if inflation persists. According to Reuters ↘ 0.71%, the "dot plot" showed officials now view rate hikes as more likely than cuts, with the Strait of Hormuz disruption cited as a factor keeping inflation elevated in the near term.reuters

The combination of higher energy costs and potential monetary tightening creates a particularly hostile environment for industrial metals like copper, aluminum, and zinc, which derive much of their value from expectations for manufacturing and construction activity.

Dollar Weakness Fails to Offset Risk Aversion

The declines in base metals came despite a weaker U.S. dollar, which has been under pressure throughout much of 2026 amid fiscal concerns. Normally, a softer greenback supports dollar-denominated commodities by making them cheaper for overseas buyers. That this dynamic failed to lift metals prices on Monday underscored the dominance of geopolitical risk sentiment over traditional market drivers.morningstar+1

LME copper had been trading around $13,400 per tonne as of last Thursday, having recovered from lows earlier in the year. The metal remains elevated compared to 2025 levels but well below the record highs seen in early 2026, reflecting the tug-of-war between structural demand from energy infrastructure and the persistent drag of conflict-driven uncertainty.westmetall