(Bloomberg) -- Copper fell more than 2% in London amid steep losses in stocks, bonds and currencies as the widening war in Iran reverberates through global markets.

All base metals headed lower on the London Metal Exchange as European trading got underway, with regional equity markets opening more than 2% lower and the dollar extending its surge. Gas prices spiked more than 30% and oil extended gains, fueling growing worries that the war will unleash a bout of inflation that will weigh heavily on consumers and factories.

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Iran has stepped up its response to US-Israeli attacks by targeting US allies, and President Donald Trump has said there is no fixed timeline for his military action. The State Department urged Americans to leave countries across the Middle East, citing “serious safety risks” amid dangers from the war.

Aluminum fell as much as 1.3%, after initially surging in the aftermath of the escalation of the Iran crisis, as traders focused on potential supply dislocations or production cuts in a region responsible for about 9% of global output. Orders to withdraw aluminum from warehouses tracked by the more than doubled to 43,325 tons on Tuesday, adding to signs of supply stress in regional markets that depend on Gulf producers for supply.

Emirates Global Aluminum — the UAE’s top producer — acknowledged delays to its exports and said it may draw on stockpiles outside the region to meet customer demands. Rio Tinto Group withdrew an initial offer to Japanese customers for second-quarter supply, as the hostilities threatened to raise regional fees.

The US Midwest premium — a key benchmark for American manufacturers — on Monday rose 1.4% to $1.055 a pound, just below the mid-February record of $1.065. Goldman Sachs Group Inc. said it sees “substantial upside” to premiums in Europe — a major market for the Gulf producers — after levels there reached the highest since 2022 last week.

But there’s also a risk that protracted hostilities could hurt major economies and fuel a downturn in metals demand.

“Pricing reflects the competing forces of short-term geopolitical risk premiums versus concerns that sustained energy inflation could weaken global industrial demand,” analysts from CreditSights wrote in an emailed note.

Trump said the US had planned for four to five weeks of military action, but could go longer, even as Defense Secretary Pete Hegseth dismissed the idea of an “endless war.” Any prolonged conflict could leave aluminum smelters in countries like the United Arab Emirates and Saudi Arabia starved of raw materials and unable to export metal.

The Middle East accounts for about a fifth of production outside China. Most of the metal produced in the Gulf states is exported, largely through the Strait of Hormuz that’s all but shut down as a trade route in the aftermath of the attacks. And while smelters will have stockpiles of raw materials like bauxite and alumina, production cuts may be necessary if those start to dwindle.

“Although Middle Eastern smelters may have close to one month of feedstock inventory, they may already be forced to cut production if the war drags on for around two weeks,” said Zhang Meng, an analyst with Shandong Aize Business Information Consulting Co. “They need to plan ahead, rather than waiting until all inventories are exhausted and then shutting down in a panic.”

Shipowners and insurers are already reluctant to deal with shipments to the Gulf, and many ports are closed in the region, Zhang added.

A month of fully lost production — together with spiking energy costs in Europe — could see aluminum prices shoot up to $3,600 a ton, according to Goldman Sachs. The bank’s base case is still for aluminum to average $3,150 in the first half of the year.

Aluminum buyers were already facing tight supply this year after various production curtailments and trade dislocations, and with China’s producers close to a government-imposed cap on the size of its industry. The planned mothballing of a large smelter in Mozambique has added to supply concerns in 2026, and prices are now up 22% from a year ago.

Copper was 2.3% lower at $12,804 a ton as of 9:54 a.m. in London, while aluminum fell 0.6% to $3,177.50 a ton. Tin led all metals lower on the LME, with losses of more than 6%.

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