Escalating tensions in the Middle East are dominating global headlines today. In the latest developments, Iran's Islamic Revolutionary Guard Corps (IRGC) issued a statement on September 9th confirming it had launched ballistic missiles targeting a US military base at Azraq, Jordan. The attack was carried out in retaliation for recent American strikes on Iranian oil tankers.
According to reports, the US Central Command stated on September 8th that American forces had destroyed five Iranian crude oil transport vessels that same day. This action followed two separate instances over the preceding two days where the IRGC had used ballistic missiles to attack a US Navy warship in the region. The US military confirmed the vessel successfully evaded the Iranian attacks and has continued its patrol duties in those territorial waters, with no American casualties reported.
On the evening of September 8th, reports from Iranian sources indicated that an Iranian oil tanker was hit by American missiles roughly 4 miles off the coast of Kharg Island. Local sources claim there were no casualties from the incident, and the tanker's crew was safely evacuated as authorities began investigating the specifics. In response to the US attacks, the IRGC issued an urgent warning, advising all tanker crews anchored in Kuwaiti and Bahraini ports—which the IRGC claims are harboring US forces—to evacuate immediately, whether in anchorage or at port, as they may be considered potential targets.
Putin and Trump Hold Constructive Call
In a separate geopolitical development, Russian President Vladimir Putin and US President Donald Trump spoke by phone on September 8th. The leaders exchanged views on the recent visits to both Russia and Ukraine made by US Special Envoy Steve Witkoff and Trump's son-in-law Jared Kushner, which took place between September 5th and 6th. Aide to the Russian President Yuri Ushakov confirmed the call lasted approximately one hour and was described as constructive and candid. The results of the US delegation's trip were positively assessed from the Russian perspective, and it was noted that continued work through this and other diplomatic channels will persist.
Oil Prices Rally to Multi-Year Highs
Global oil markets reacted sharply to these supply-side concerns. The US Strategic Petroleum Reserve saw its stockpile decline by approximately 1.2 million barrels last week, bringing total reserves to 285.4 million barrels—the lowest level since 1982. This supply squeeze, combined with geopolitical risk premiums, pushed international crude prices higher. The WTI crude oil futures contract settled up 1.67% at $94.25 per barrel, while Brent crude futures rose 2.39% to close at $99.32 per barrel.
Meanwhile, US equities closed the session broadly lower, with the Dow Jones Industrial Average falling 1.17%, the Nasdaq Composite shedding 0.32%, and the S&P 500 index declining 0.58%. Despite the overall market weakness, certain sectors showed strength: AI computing power leasing and optical communications stocks posted sizable gains, Intel surged more than 9%, and SpaceX climbed over 3% to push its total market capitalization back above the $2 trillion threshold.
Key Drivers Behind the Copper Price Surge
Turning to commodity markets, Shanghai copper futures for the main contract climbed 1.29% on the day to close at 110,620 yuan per tonne, setting a new all-time high. The recent rally has been fueled by tight concentrate supply and persistently low global inventories. Prior to this, LME copper prices had broken through the historical threshold of $14,600 per tonne.
Industry experts point to a core driver behind this latest leg of the rally: the "suction effect" on global copper inventories triggered by expectations of US tariff policies. Wang Yanhong, research head at Zhengxin Futures, explained that this factor has created tightness in non-US copper supply, with a combination of premium increases and short-covering expectations pushing prices through previous highs. The ongoing supply deficit continues to underpin elevated price levels.
Qu Yajuan, a non-ferrous metals analyst at Changan Futures, provided more granular insights into the supply dynamics. Global copper mine production contracted by 1.1% year-on-year in the first half of this year, with spot treatment charges for imported copper concentrate now hovering around negative $200 per tonne. This indicates deteriorating procurement conditions for smelters, with raw material shortages filtering through to the smelting stage. Concurrently, expectations of US import tariffs on copper have widened the arbitrage window between COMEX and LME contracts—LME inventories are falling rapidly while COMEX stocks build, creating physical scarcity in non-US regions. This has visibly lifted the LME cash-to-three-month spread premium.
From a structural perspective, Qu Yajuan argued that demand growth from global AI development and green energy transition remains the fundamental driver of copper's long-term bull market. However, with current demand showing no significant bright spots, this factor is not yet the primary catalyst. Morgan Stanley projects that global datacenter copper consumption will reach 740,000 tonnes in 2026, directly contributing 0.6 percentage points to worldwide demand growth, with projections rising to 1.3 million tonnes by 2028.
Nevertheless, the persistently elevated copper prices are beginning to restrain end-user demand. Qu noted that current downstream operating rates suggest high prices are not conducive to new order releases. Downstream buyers have adopted a more cautious stance, and spot premiums have been gradually contracting. This softer demand profile could cap further upside in the near term. However, the consensus view of medium-to-long-term copper strength remains strong—any meaningful pullback may trigger restocking activity from downstream consumers. Additionally, the upcoming traditional consumption peak season, resilient grid demand, and potential year-end recovery in autos and equipment sales all point to improving demand fundamentals.
Wang Yanhong emphasized that the variables genuinely limiting upside for Shanghai copper remain US Federal Reserve policy direction and Washington's tariff decisions, rather than short-term physical market absorption capacity. As the September 28th statutory deadline for the US Section 232 investigation's "90-day presidential decision period" approaches, global copper markets stand at a critical policy crossroads. Should tariff implementation face further delays, the current tightness in concentrate and refined copper supply may persist, arbitrage opportunities between COMEX and LME remain open, and prices appear structurally biased to the upside. Conversely, if the tariffs are enacted, prices could face short-term downward pressure, the COMEX-LME spread may gradually narrow, and the US suction effect on global copper resources would diminish. Given persistent international trade frictions and potential obstacles to inventory outflows from COMEX, copper supply in non-US regions is likely to remain in a tight balance overall.
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