UK-based market research agency CreditSights says the conflict in Iran is already influencing global metals markets, with prices reflecting both geopolitical risk premiums and rising energy costs.

For one, gold has moved higher as investors opt for safe-haven assets amid heightened uncertainty. Spot gold prices averaged $5 400/oz on March 1, a day after the US and Israel launched military attacks in Iran.

CreditSights says the move underscores a flight-to-quality dynamic, which suggests that markets are pricing in sustained geopolitical tension rather than a short-lived disruption.

Industrial metals have exhibited a more differentiated response. Aluminium has been the most sensitive among base metals, with benchmark prices rising 3% to $3 230/t.

The Middle East plays a meaningful role in global aluminium supply, accounting for between 8% and 10% of global primary aluminium production every year.

Gulf producers, particularly in the United Arab Emirates, Bahrain, Saudi Arabia and Qatar are highly export-oriented and rely heavily on maritime routes through the Strait of Hormuz, which has been shut to traffic as a result of the conflict.

Even in the absence of physical disruption, rising war-risk insurance premiums, vessel rerouting and higher freight rates can tighten regional supply and lift spot premiums.

According to CreditSights, Alcoa and Rio Tinto are the primary beneficiaries of higher aluminium prices.

By contrast, copper and other base metals have shown a more muted or mixed performance. These markets have less direct exposure to Middle Eastern mine supply and pricing reflects the competing forces of short-term geopolitical risk premiums versus concerns that sustained energy inflation could weaken global industrial demand.

Crude oil prices have spiked 6% on escalation fears, introducing a secondary inflationary channel into metals production.

Mining, refining and smelting operations are energy intensive and higher oil and liquefied natural gas prices increase operating costs globally.

“While this can support metal prices through higher marginal cost curves, it also raises the risk of demand moderation if elevated energy prices slow growth in key consuming regions,” CreditSights explains.

Overall, the current market response suggests a bifurcated dynamic: precious metals are benefiting from defensive positioning and safe-haven flows, while industrial metals are balancing supply-chain risk against macroeconomic headwinds.

CreditSights expects near-term volatility to remain elevated as markets assess the probability of shipping disruptions and sustained energy price shocks.

Medium-term price direction will depend on whether geopolitical tensions translate into material physical supply constraints or whether the dominant effect becomes slower global industrial activity driven by higher energy costs.