Copper prices rallied significantly following news of "major progress" in peace talks between the United States and Iran. Futures climbed 1.1% to settle at $13,667.50 a metric ton on the London Metal Exchange. This surge is attributed to optimism that a peace deal will ease geopolitical tensions and reduce inflation fears that had been weighing on markets. Traders also cited the influence of a premium for the metal in the US.
The discussions, held in Bürgenstock, Switzerland, saw participants including US Vice President JD Vance and Iranian Foreign Minister Abbas Araghchi. Mediators from Qatar and Pakistan confirmed that encouraging progress was made, establishing a roadmap for a final deal within 60 days. This includes a communication line to prevent incidents and ensure safe passage for commercial vessels through the Strait of Hormuz, a critical waterway for global energy supplies.
The reopening of the Strait of Hormuz after an interim agreement last week, and the continued flow of millions of barrels of oil through it, has already had a positive impact on the markets. Brent crude, which had climbed over 2%, turned lower after the peace talk progress, stabilizing below $80 a barrel. The improved outlook for trade and reduced risk premiums for shipping are expected to support broader economic activity, leading to increased demand for industrial metals like copper. All other base metals on the LME also advanced.
The positive developments in US-Iran relations also boosted US equities, with the S&P 500 experiencing its longest weekly rally since 2023. This broader market optimism reflects hopes for greater stability in the Middle East and a potential easing of the war in Lebanon, which has displaced over 1 million Lebanese. The focus now shifts to the technical-level discussions this week, which will aim to finalize the details of the peace accord and further solidify market confidence.
