By Ivan Kesic

The global economy's dependence on the Strait of Hormuz extends far beyond oil and natural gas. A prolonged disruption to shipping through this narrow passage can affect industrial materials, energy systems and manufacturing networks on which modern economies depend.

That vulnerability has become far more acute since the US-Israeli aggression against Iran and the wider campaign of pressure pursued by Washington, whose anti-Iran policies have repeatedly treated the region's strategic arteries as leverage in a broader confrontation.

Copper is an especially important example of how that pressure travels through the world economy. Essential to electricity grids, data centers, electric vehicles, renewable-energy installations, military systems and industrial machinery, the metal occupies a strategic position at the intersection of the energy transition and the expansion of artificial intelligence.

Two dimensions of the emerging copper challenge deserve attention: the immediate disruption to industrial supply chains caused by the Hormuz crisis, and the longer-term structural imbalance between the world's capacity to produce copper and the amount that increasingly electrified economies are expected to consume.

Strategic metal at the center of the storm

Copper prices reached a record level in September 2026, representing an increase of 76 percent since the beginning of 2024.

The surge reflects several overlapping forces: rapidly growing demand, constraints on mining supply, geopolitical uncertainty, speculation about prospective US tariffs and disruptions to West Asian supplies of sulphur, a material used in copper extraction.

The central warning is that a prolonged supply shortfall could raise the cost of artificial intelligence infrastructure, military technology and the global transition to cleaner energy.

The distinction between short-term disruption and long-term scarcity is essential. The International Copper Study Group's October 2026 forecast still anticipated a modest surplus of refined copper in both 2026 and 2027.

BloombergNEF, by contrast, forecasts a structural shortage beginning in 2028 and widening substantially over subsequent decades. These projections address different time horizons and assumptions.

They suggest that the world is not necessarily facing an immediate, universal exhaustion of copper stocks, but it may be approaching a period in which supply becomes increasingly difficult and expensive to expand.

How the Hormuz crisis reaches copper

The Strait of Hormuz connects the Persian Gulf with the Gulf of Oman and the wider Indian Ocean. It is one of the world's most strategically important maritime chokepoints, particularly for oil, liquefied natural gas and industrial commodities originating in the Persian Gulf region.

When passage becomes dangerous or restricted, the consequences extend beyond the vessels directly affected, as insurers reassess risks, shipping companies alter routes, buyers search for alternative suppliers, and the cost of transporting goods rises even when those goods are not shipped through the strait themselves.

Copper's connection to the crisis is less obvious than oil's but economically significant. One of the key links is sulphur, produced in large quantities during the processing of oil and natural gas.

Sulphur is used to manufacture sulphuric acid, an important industrial chemical employed in several mining and metallurgical processes.

In copper production, sulphuric acid is particularly important for operations that extract copper from oxidized ores through leaching, with the resulting copper-bearing solution processed through solvent extraction and electrowinning to produce metal of high purity.

A disruption to sulphur supplies can therefore propagate through the supply chain. Maritime-data analysis described the sulphur disruption in June 2026 as an unusually severe supply shock, identifying the Strait of Hormuz disruption alongside Chinese restrictions on sulphuric-acid exports and Russian restrictions on sulphur exports.

More than 600,000 tonnes of sulphur had accumulated in the Persian Gulf by the first major peak in April, while global sulphur exports had fallen substantially from their late-February levels.

However, the impact on copper should not be exaggerated. Not all copper mines depend equally on sulphuric acid, and a substantial part of global production comes from sulphide ores processed into concentrates and subsequently smelted and refined.

The crisis is best understood as an additional constraint on an already challenging industrial system, rather than a direct blockade of the world's principal copper supply routes.

Why copper has become indispensable

Copper has been used by human societies for thousands of years, but its economic importance has expanded with electrification.

Its combination of high electrical conductivity, ductility, corrosion resistance and established manufacturing processes makes it particularly valuable for carrying electricity and transmitting signals.

Modern power grids depend on copper in generators, transformers, cables, switchgear and distribution equipment, while buildings, industrial facilities, telecommunications networks and electronic devices all rely on the metal to varying degrees.

The energy transition adds another major source of demand. Solar-power installations require copper in wiring, inverters, transformers and grid connections; wind turbines use it in generators and cables, and electric vehicles generally require more copper than comparable conventional vehicles because of their motors, high-voltage wiring and charging infrastructure.

Artificial intelligence is creating a further source of demand, since data centers need electrical connections, power-distribution equipment, backup systems and cooling infrastructure, and their servers and networking equipment contain copper alongside the substantial electrical systems required to operate them.

The International Energy Agency (IEA) has already identified copper as a major concern among critical minerals, projecting that the existing pipeline of mining projects could leave global copper supply about 30 percent below projected demand by 2035, and highlighting declining ore grades, rising capital costs, limited discoveries and lengthy development periods as obstacles to expanding production.

BloombergNEF's October 2026 outlook forecasts that copper demand will rise by 61 percent between 2026 and 2050, reaching nearly 46 million tonnes annually, with the shortfall potentially reaching 20 million tonnes by 2050, equivalent to 44 percent of projected demand. Closing that gap would require approximately $332 billion in investment in new mines.

Why markets cannot respond quickly

Commodity markets often respond to shortages through higher prices, which encourage producers to increase output, reopen uneconomic operations and develop new deposits.

Copper mining, however, has unusually long response times. Finding a commercially viable deposit is only the beginning.

A developer must establish the size and quality of the resource, assess environmental and water constraints, obtain permits, negotiate land access and community agreements, secure financing, construct infrastructure and install processing equipment.

Remote deposits may require roads, railways, power lines, water supplies and ports before production can begin.

Developing a new mine can take as long as 15 years from discovery through permitting and construction, with some estimates placing the average development period at approximately 17 years.

Existing mines also face geological challenges, since as higher-grade ore is extracted, operators often need to process larger quantities of rock to obtain the same amount of copper, with lower ore grades meaning more energy consumption, greater water requirements, higher processing costs and larger volumes of waste.

Investment decisions create another complication. Mining companies must commit large amounts of capital years before they know what market prices will be when a new operation begins producing, and investors may prefer projects that extend the life of existing mines rather than high-risk exploration in unfamiliar regions.

Political instability, changing tax rules, resource nationalism, environmental objections and uncertainty over future demand can further discourage investment.

The Hormuz crisis adds a different form of pressure. It can raise the cost of fuel, electricity, shipping and chemical inputs used by mines already in operation, and rather than immediately creating new copper production, higher prices for these inputs can squeeze operating margins.

Analysis published in March 2026 modeled the effects of the Hormuz disruption on copper mining costs, estimating that reagent costs could rise by 36 percent relative to a baseline forecast, with fuel, electricity and transportation costs also contributing to higher expenses.

What the latest forecasts actually say

In its October 2026 forecast, the International Copper Study Group estimated that global mine production would grow by 1.3 percent in 2026, followed by growth of approximately 3.1 percent in 2027.

Refined copper production was forecast to increase by only 0.4 percent in 2026, before rising by 3.4 percent in 2027, with the modest 2026 increase attributed partly to constrained concentrate availability.

The same forecast projected global refined copper usage growth of 1.5 percent in 2026 and 2.5 percent in 2027, on which basis the group expected a refined-copper surplus of approximately 104,000 tonnes in 2026 and 368,000 tonnes in 2027.

These projections do not invalidate the warning of a future shortage. They indicate that the immediate market balance may remain in surplus even while the industry faces substantial long-term constraints.

A market can have enough refined copper in the aggregate for a particular year and still experience regional shortages, higher premiums, delivery delays or difficulties obtaining specific products.

It can also move from surplus to deficit if production disappoints, demand accelerates or inventories are drawn down unexpectedly. The group itself cautioned that developments in West Asia could alter its production and usage projections.

BloombergNEF's warning addresses a different period, with its forecast of a deficit beginning in 2028 reflecting projected demand growth and the capacity of the mining industry to meet that demand over the coming decades.

Taken together, these assessments point to a market vulnerable to shocks, not one whose future can be described by a single shortage number.

The Hormuz crisis raises near-term costs and uncertainty, while the structural challenge is to expand production quickly enough to prevent those shocks from becoming part of a longer-lasting supply deficit.

Artificial intelligence and military face higher costs

The expansion of artificial intelligence is frequently discussed in terms of chips, computing power and software, yet AI infrastructure also depends on physical systems: buildings, power connections, substations, transformers, cables, cooling equipment and backup supplies.

Copper is embedded throughout this infrastructure. Large technology companies may be able to absorb higher metal prices more easily than smaller industrial users, since their projects can involve substantial budgets and access to computing capacity is strategically important to their business models.

If copper becomes more expensive, some developers may accept higher costs rather than delay construction.

That does not mean the consequences will be negligible. A sustained increase in copper prices could raise the capital expenditure required to build data centers and connect them to electricity networks, and if transformers, cables or other electrical equipment are already in short supply, higher material costs could compound existing bottlenecks.

Military industries face a similar challenge, since modern military systems use copper in power generation and distribution, communications equipment, radar, electronics, vehicles, ships, aircraft and supporting infrastructure.

The metal is not necessarily the most expensive component in these systems, but rising costs across electrical and electronic supply chains can add pressure to procurement programs, particularly when governments are simultaneously increasing military spending.

In both sectors, the main concern is not that copper will suddenly disappear from the market, but that increasingly intense competition for supplies may raise costs and make timely access to materials less predictable.

Energy transition could bear the greatest burden

The potential impact on the green transition is particularly consequential because many clean-energy technologies require extensive new infrastructure.

Renewable generation must be connected to grids, electric vehicles need charging networks, and aging transmission and distribution systems must be upgraded to accommodate changing patterns of electricity production and consumption.

If copper prices rise persistently, the cost of these investments can increase, and developers may postpone projects, utilities may spread grid upgrades over longer periods, and governments may find that climate and electrification programs require more funding than originally expected.

The impact may be unevenly distributed. Wealthier countries and large corporations may be able to secure supplies through long-term contracts, strategic stockpiles or direct investment in mines, while smaller utilities, manufacturers and developing economies may have less bargaining power and more limited access to capital.

This creates a risk that high copper prices will slow electrification precisely where investment is most needed. Higher prices can also encourage substitution.

Aluminum, for example, is used instead of copper in certain power cables and electrical applications because it is lighter and often less expensive, though it has lower electrical conductivity by volume, so replacing copper may require larger conductors or changes in equipment design.

Efficiency improvements can reduce copper requirements per unit of service, but such gains may be offset by the scale of new infrastructure needed.

Even if individual systems use copper more efficiently, the total amount consumed may continue to rise as grids, data centers, vehicles and renewable installations expand.

Recycling and alternative supplies can help, but not instantly

Copper has an important advantage over many industrial materials: it can be recycled repeatedly without losing its fundamental chemical properties.

Recycled copper can reduce the need for newly mined material and, in many circumstances, requires less energy to produce than primary copper.

Greater collection of discarded electrical equipment, construction materials, machinery and vehicles could therefore help moderate future demand for newly mined copper, and improved recycling infrastructure and more effective recovery from industrial waste may become increasingly valuable as prices rise.

However, recycling cannot eliminate the problem. Copper in long-lived infrastructure remains in use for decades before becoming available for recovery, and a rapidly expanding economy may need more copper than its existing stock of retired products can provide.

Collection systems are also imperfect, and recovering copper from complex products can be technically difficult or economically unattractive.

Scrap quality matters, too, since recycled copper must be collected, sorted and processed to meet the requirements of its intended application.

New mines, expanded existing operations, better processing technologies and recycling will all contribute to the eventual response, but each has constraints, and none offers an immediate solution to every shortage.

Geopolitical shock with consequences far beyond the Persian Gulf

The Strait of Hormuz crisis illustrates how modern industrial economies can be exposed to disruptions far from the factories, mines and infrastructure projects that ultimately feel their effects.

A chokepoint associated primarily with oil and gas can also influence the availability and price of chemical inputs used in mineral production, and those changes can then affect copper costs, industrial investment and the technologies that depend on the metal.

Yet the crisis is an accelerant, not the sole cause of the looming copper challenge. The deeper problem is the difficulty of expanding mine supply in line with the expected growth of electrification, digital infrastructure and other industrial uses.

The market's short-term surplus forecasts are a reminder that the outcome is not predetermined. Mine expansions, stronger production, recycling, substitution, slower demand growth and improvements in technology could all reduce the projected gap.

Conversely, prolonged disruption, further production setbacks, inadequate investment or faster-than-expected demand could worsen it.

The most realistic conclusion is therefore neither that a global copper shortage is already inevitable nor that the market can solve the problem automatically through higher prices.

Copper supply can respond, but the process is slow, capital-intensive and exposed to geopolitical, environmental and operational risks.

The coming years will test whether mining companies, governments and manufacturers can turn high prices and strategic concern into the investment needed to expand supply.

If they succeed, the closure of the Strait of Hormuz due to US military aggression and maritime banditry and piracy may be remembered as a costly disruption that accelerated efforts to diversify supply chains and improve resource efficiency.

If they fail, the crisis could become an early warning of a broader industrial constraint, one that makes AI infrastructure more expensive, complicates defense modernization and slows the expansion of clean-energy systems.

Copper is often treated as a basic industrial commodity, but in an increasingly electrified and digitally connected economy it is also a strategic resource, and the ability to secure enough of it at a predictable cost and with reliable delivery may become one of the less visible but more consequential determinants of global economic growth.