Why Copper Prices Are Surging Despite Peace Talks in the Middle East

Goldman Sachs analysts have warned that prolonged disruptions to shipping through the Strait of Hormuz could tighten sulfuric‑acid supply and threaten copper output. The risk is amplified by policy changes such as China restricting sulfuric‑acid exports, which could further strain availability for global copper processing.

In other words, a geopolitical crisis that begins with oil tankers and shipping lanes can indirectly constrain copper supply through the chemicals needed to refine it.

Copper’s Structural Demand Boom: AI, Power Grids, and Clean Energy

While geopolitics explains short‑term price spikes, the deeper story lies in long‑term demand.

Copper is a foundational material for electrification. Massive investments in renewable energy, electric vehicles, and electricity grids require large volumes of copper wiring and components. The rapid expansion of AI data centers—along with the power infrastructure needed to run them—has added a new layer of structural demand.

Markets have increasingly linked the rally in industrial metals to this broader technology and electrification cycle. Analysts note that commodities tied to infrastructure and computing power have surged even when oil‑related disruptions ease, indicating the rally is not purely geopolitical.

These demand drivers have helped keep copper prices elevated even during brief pullbacks tied to peace‑talk optimism.

Price Levels: Still Near Record Territory

Copper futures recently pulled back from a record high of about $6.65 per pound reached in May but remained historically elevated. Ongoing geopolitical uncertainty and high energy costs have kept input costs and investor expectations for supply tightness high.

This combination—volatile geopolitics plus persistent demand growth—has made copper one of the most closely watched industrial commodities in global markets.

What Major Banks Forecast Next

Investment banks largely agree on one point: volatility is likely in the near term, but the long‑term outlook depends on supply growth versus electrification demand.

Goldman Sachs has taken a more cautious short‑term stance. The bank expects the global copper market to move into a surplus in 2026 and forecasts an average copper price around $12,650 per metric ton, reflecting softer demand growth and possible increases in supply.

However, Goldman also notes that supply‑chain disruptions—particularly those affecting sulfuric acid or shipping routes—could still create temporary shortages and push prices higher than expected.

UBS, by contrast, remains strongly bullish. The bank has raised its copper price forecasts and expects the metal could reach around $15,000 per metric ton by early 2027, citing persistent supply constraints and accelerating demand from electrification and infrastructure.

What a Peace Deal Would Actually Change

If a durable U.S.–Iran agreement restores normal shipping through the Strait of Hormuz, several near‑term pressures could ease:

• shipping costs for industrial inputs could fall
• sulfur and sulfuric‑acid availability could improve
• some of the geopolitical premium embedded in commodity prices could fade

But a peace deal would not eliminate the larger structural demand drivers behind copper’s rally. Massive investment in power networks, renewable energy, and digital infrastructure means copper consumption is expected to rise for years.

The Bottom Line

Copper’s surge is not being driven by a single factor. Instead, it reflects the collision of short‑term geopolitical shocks and long‑term structural demand.

Middle East shipping disruptions and sulfuric‑acid supply risks can tighten copper production in the near term, creating price spikes. At the same time, electrification, renewable energy expansion, and the global race to build AI infrastructure are pushing long‑term demand higher.

That is why even if geopolitical tensions ease, many analysts still expect copper to remain one of the most strategically important—and potentially volatile—commodities of the decade.