May 8 (Reuters) - Citi said on Friday it expects copper to remain well supported around $13,000 a metric ton, but flagged caution as any risk-off sentiment triggered by a U.S.–Iran re-escalation could easily push prices lower.

"Even with a sharper risk sell-off we expect physical dip-buying to keep prices supported above $12,000/t through the second quarter of 2026," it said.

Benchmark three-month copper CMCU3 on the London Metal Exchange climbed to a three-month high on Friday after miner Freeport-McMoRan flagged a slight delay in the recovery of production at its Grasberg mine in Indonesia, tightening supply expectations. MET/L

On the geopolitical front, U.S. and Iranian forces clashed in the Gulf and the United Arab Emirates came under renewed attack, but President Donald Trump said a ceasefire was still holding despite the flare-up, which dented hopes for a swift diplomatic resolution to the crisis.

Citi said that in its base case, headwinds from U.S. tariffs and inventory dynamics could prompt copper prices to moderate to $12,000 per ton by the fourth quarter of 2026.

In its bull case, the bank said the metal could reach $15,000 per metric ton by year-end on growth expectations improving if the Strait were to reopen, and on renewed momentum in energy-transition demand.