Why did copper prices drop after the US-Iran clash in the Persian Gulf?

Copper fell as much as 1.7% on the London Metal Exchange due to heightened geopolitical risk following the US and Iran exchanging fire in the Persian Gulf, which cast doubt over the ceasefire’s durability and raised concerns about further escalation—potentially disrupting global markets. A key risk highlighted is a prolonged closure of the Strait of Hormuz, which would worsen the energy shock, pressure central banks toward a more hawkish monetary stance, hurt manufacturing, and suppress demand for industrial commodities like copper. Additionally, bearish sentiment was reinforced by copper stockpiles in LME-tracked warehouses remaining near their highest level since 2013.

What were the immediate market impacts of the US-Iran confrontation on Monday, according to the report?

On Monday, copper dropped 1% to $12,863 a ton on the LME (as of 10:02 a.m. Shanghai time), aluminum fell 0.9%, and zinc dropped 1.1%; iron ore futures were little changed at $108.40 a ton on the Singapore Exchange amid subdued trading due to a China holiday. The LME itself was closed for a UK public holiday, but copper had already fallen sharply in reaction to the incident—marking a reversal after closing higher on Friday for the first time in seven sessions. The confrontation involved the US military defending two US-flagged vessels transiting the Strait of Hormuz while a drone strike hit Fujairah port in the UAE.

Copper Drops as US and Iran Trade Fire in Gulf, Testing Truce

May 4, 2026

Copper prices fell up to 1.7% on the London Metal Exchange following renewed military tensions between the US and Iran in the Persian Gulf. Geopolitical risks threaten global supply chains, impacting industrial commodity demand despite high stockpiles.

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