Middle East Tensions Weigh on Base Metals Amid Global Economic Uncertainty

The global economy's uncertainty is weighing on base metals as tensions in the Middle East escalate. While copper, aluminum, and zinc are all poised for weekly gains, trading has been cautious due to recent attacks by Iran-backed Houthi rebels in Yemen.

Brent crude prices surged above $100 a barrel at one point, potentially fueling inflation that may trigger higher interest rates. BMI, a unit of Fitch Solutions, notes that ongoing military skirmishes have reduced the prospect of near-term rate cuts and increased the risk of a stronger US dollar and higher bond yields.

Despite this uncertainty, copper demand is running ahead of supply, with prices still up around 10% this year on the London Metal Exchange. The metal neared $14,000 a ton earlier in the week, but has since dropped to $13,636 a ton.