Copper prices declined slightly, trimming part of their strong monthly gains, at a time when traders await the potential resumption of peace negotiations between the United States and Iran.

The industrial metal fell by 0.3% by late morning London trading, after having earlier risen by as much as 0.8% to exceed the February 27 closing level of $13,343.50 per ton, the day before the start of U.S. and Israeli strikes on Iran.

Most base metals have witnessed sharp fluctuations since the outbreak of the conflict, as prices initially declined due to concerns over supply chain disruptions and slowing economic growth, before risk appetite returned following the temporary truce reached last week, supported by reports stating that Washington and Tehran are seeking to arrange a second round of talks in the coming days, alongside signs of improved Chinese demand.

Fan Rui, an analyst at Guoyuan Futures, said: "Copper has begun to recover; after the rebuilding of inventories in China, inflation concerns have receded with the progress of peace talks," adding that "the worst is over."

In China, manufacturing companies increased their purchases after domestic copper prices fell to less than 100,000 yuan per ton in recent weeks due to the war, leading to a significant decline in domestic inventories.

Despite the short-term economic impact of the energy crisis, this shock may support copper demand growth in the long term, with the acceleration of economies' shift toward electrification and clean energy, according to Henry Fan, an analyst at Trafigura Group, during an industry conference in Santiago.

He explained that "all the major trends that were supporting copper prices will now accelerate," noting that there is a greater incentive than ever to enhance reliance on electricity and reduce the impact of geopolitical shocks on energy consumption.

The market is also monitoring the potential for a new wave of copper imports into the United States, after prices on the Comex exchange in New York recorded a premium of $283 per ton compared to London Metal Exchange prices, the highest level since December.

U.S. President Donald Trump's plans to impose tariffs on copper imports led to a rise in Comex prices last year, allowing traders to achieve significant profits by shipping copper to U.S. warehouses. Investors still expect a decision regarding tariffs on refined copper by the end of June, when the U.S. Department of Commerce provides an update on the copper market.

By 10:52 AM London time, copper fell by 0.3% to $13,248 per ton on the London Metal Exchange, while Comex prices declined by 0.2%.

As for aluminum—which has seen a strong rise since the beginning of the war due to concerns regarding supplies resulting from the effective closure of the Strait of Hormuz and attacks on smelters in the Gulf region—it rose by 0.2% to $3,568.50 per ton.

JPMorgan analysts indicated that the aluminum market may have reached a "point of no return" in terms of supplies during the coming quarters, emphasizing that the global market will face a sharp and prolonged shortage regardless of the developments in shipping traffic through the Strait of Hormuz.

The bank expects a supply deficit of 1.9 million tons in 2026, the largest since 2000 when considering market size, with the possibility of prices exceeding the level of $4,000 per ton during the coming months, according to estimates by the analyst team led by Gregory Shearer.

Bitcoin maintained its stability on Wednesday after jumping above the $74,000 level in the previous session, supported by improved global risk appetite and hopes for the resumption of a diplomatic path between the United States and Iran.

The digital currency was trading down slightly by 0.7% at $74,018.7 by 02:48 AM ET (06:48 GMT), after recently touching levels near $76,000 during the past 24 hours before the pace of the rally slowed due to profit-taking operations.

Bitcoin's movements were in line with the rise in global stock markets, as Wall Street closed with strong gains, with the S&P 500 approaching record highs and the Nasdaq achieving a notable increase, while Asian stocks continued their gains on Wednesday.

Investors were encouraged by U.S. President Donald Trump's announcement regarding the potential resumption of talks with Iran, which boosted hopes for cooling tensions in the Middle East, despite continued friction as the United States imposes a naval blockade on ships departing Iranian ports and Tehran threatens to retaliate against the ports of neighboring Gulf countries.

Weaker-than-expected U.S. inflation data also contributed to supporting markets after producer price data showed slowing price pressures, strengthening expectations that interest rates may not remain elevated for a long period.

Market reports indicated continued buying by major investors, with on-chain data showing stable flows to primary wallets, reflecting ongoing accumulation.

Recently, Bitcoin has increasingly moved in parallel with stock markets, reflecting its sensitivity to macroeconomic and geopolitical developments.

Analysts warn that any deterioration in talks between Washington and Tehran or a new spike in oil prices could pressure risk appetite and negatively affect the cryptocurrency market.

As for altcoins, most of them declined slightly after strong gains in the previous session, with Ethereum falling 2.4% to $2,317.92, while Ripple decreased 1.2% to $1.35.

Oil prices rose by more than 1% amid continued restrictions on shipping traffic through the Strait of Hormuz, which overshadowed expectations for the resumption of talks between the United States and Iran aimed at ending the war in the Middle East.

After 45 days since the Iranian Revolutionary Guard announced the closure of the Strait—through which approximately 20% of global oil and liquefied natural gas (LNG) shipments pass—navigation remains unstable despite a two-week truce. Sources indicate that the number of transiting vessels represents only a fraction of the more than 130 daily trips recorded before the outbreak of the war.

Brent crude contracts rose by $1.30, or 1.4%, to reach $96.09 per barrel, after declining 4.6% in the previous session. U.S. West Texas Intermediate (WTI) crude also climbed by $1.01, or 1.1%, to $92.29 per barrel, following a drop of nearly 7.9% in the previous session.

This rise came despite the increase in stock indices on Tuesday as optimism grew regarding a potential resolution to the conflict, with the S&P 500 approaching record highs.

U.S. President Donald Trump stated that talks with Tehran might resume this week after ending without an agreement over the weekend. Meanwhile, the United States has also imposed a naval blockade on Iranian ports, which its forces confirmed has completely halted maritime trade to and from Iran.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, noted that the optimism driven by hopes of a deal has begun to fade. she pointed out that even in the event of a rapid breakthrough and the reopening of the Strait of Hormuz, supply bottlenecks in essential commodities such as oil, gas, fertilizers, and helium could take a long time to recede.

Amid these disruptions, refiners are urgently seeking alternative crude supplies, leading to a rise in price premiums, especially for oil from regions such as the U.S. Gulf Coast and the North Sea. A shipment of WTI Midland for delivery in Rotterdam was traded at a record premium of $22.80 above European benchmarks.

In another development, a U.S. destroyer stopped two oil tankers attempting to leave Iran on Tuesday, according to a U.S. official.

An analyst at SEB bank stated that reopening the Strait does not depend on Washington alone, as Iran has its own calculations. Tehran may view the continued restrictions on oil flows as a strategic leverage tool, whether to obtain compensation, security guarantees, or to achieve political gains ahead of the U.S. midterm elections.

The market may also face further supply shortages after two U.S. administration officials indicated that Washington will not renew a 30-day sanctions waiver for seaborne Iranian oil that expires this week, in addition to the expiration of a similar waiver for Russian oil over the weekend.

Later today, investors await official U.S. inventory data from the Energy Information Administration (EIA). Expectations point to a slight increase in crude oil inventories last week, against a potential decrease in gasoline and distillate stocks.

Sources familiar with American Petroleum Institute (API) data also reported that crude oil inventories in the United States recorded an increase for the third consecutive week.

The U.S. dollar approached its lowest levels in six weeks on Wednesday, giving up most of the gains it achieved since the outbreak of the war with Iran, amid signs of the potential resumption of a new round of talks between Washington and Tehran, which boosted investor risk appetite.

Since the start of the war between the United States and Israel on one side and Iran on the other on February 28, Tehran has effectively closed the Strait of Hormuz, a vital waterway through which about one-fifth of global oil and gas shipments pass, leading to a sharp rise in energy prices and increased concerns regarding the impact on global growth and inflation.

Washington imposed a blockade on Iranian ports after the collapse of weekend talks, but U.S. President Donald Trump said on Tuesday that talks to end the war may resume in Pakistan within the coming days, which contributed to strengthening investor confidence and reducing demand for the dollar as a safe haven.

Regarding other currencies, the euro declined slightly by 0.1% to $1.177, near its highest levels since March 2, and the British pound also fell slightly to $1.355.

As for the dollar index, which measures the performance of the American currency against a basket of six major currencies, it returned to its level at the end of February, after having risen by about 3% in early March.

Although the talks that took place in Islamabad last weekend did not yield a breakthrough, raising doubts about the sustainability of a two-week truce that still has one week remaining, investors still hold onto hopes that diplomatic efforts will lead to a solution.

The dollar had benefited significantly from safe-haven flows in March; however, optimism regarding the ceasefire and the possibility of reaching a settlement pushed it to decline by about 2% this month against major currencies.

With the continuation of the state of uncertainty, Lee Hardman, currency strategist at MUFG Bank, warned against rushing to bet on a further decline of the dollar, noting that markets may be overly optimistic about a quick return to normalcy.

He added that there is a risk that markets are underestimating the scale of the energy price shock and its potential impact on the global economy.

Investors are currently focusing on the extent of the damage that may befall the global economy due to the energy shock, especially with physical oil prices trading above $140 per barrel, although futures contracts have returned to below $100.

The International Monetary Fund had lowered its global growth forecasts due to rising energy prices, warning that the world is already heading toward a more negative scenario with a sharper slowdown in growth.

In the worst-case scenarios, the Fund sees the global economy approaching the brink of recession, with average oil prices reaching $110 per barrel in 2026 and $125 in 2027.

On the other hand, the Japanese yen declined by 0.14% to 158.95 against the dollar, and it remains below its pre-war levels, affected by the rising costs of imported energy.

The rise in oil and natural gas prices also led markets to price in the possibility of both the European Central Bank and the Bank of England raising interest rates this year to curb inflation, while even a single interest rate cut by the Federal Reserve has become a matter of doubt.

Former U.S. Treasury Secretary Janet Yellen considered that one interest rate cut by the Fed is still possible this year, despite inflationary pressures resulting from supply shocks associated with the war, noting that the central bank will continue to closely monitor inflation expectations while keeping its options open.