Oil Is No Longer a Weapon

For decades, a major military conflict involving Iran would almost certainly have sent global oil prices soaring. Conventional wisdom held that any disruption in the Persian Gulf would trigger an energy crisis, fuel inflation, and push the world economy toward recession. Yet, nearly five months into the US-Iran war, oil prices have remained relatively stable. This apparent contradiction deserves closer examination.

The foremost reason is that the conflict has not significantly disrupted physical oil supplies. Energy markets react less to military headlines than to actual interruptions in production and transportation. Despite intense hostilities, oil has continued to flow.

The Strait of Hormuz, through which nearly one-fifth of the world's seaborne oil trade passes, remains open. Although shipping costs and insurance premiums have risen, oil tankers continue to transit the waterway. A prolonged blockade would almost certainly have triggered a dramatic spike in crude prices.

Iran has also continued exporting crude oil, primarily to China and, through indirect channels, to other Asian buyers. At the same time, Saudi Arabia, the UAE and other Gulf producers have maintained production, while exports through the Red Sea have largely continued despite heightened security risks.

The global energy landscape has changed fundamentally over the past decade. The United States has emerged as one of the world's largest producers of both crude oil and natural gas, reducing dependence on Middle Eastern supplies. Meanwhile, despite Western sanctions, Russian oil continues to reach international markets through alternative buyers and trading routes, preventing a significant supply shortfall.

Demand-side factors have also played a role. Slower economic growth in China and subdued industrial activity in several major economies have moderated global oil consumption, offsetting much of the upward pressure created by geopolitical tensions.

Perhaps the most important factor is market confidence that none of the principal actors wants to ignite a full-scale energy crisis by destroying vital oil infrastructure or permanently blocking key shipping lanes. Investors have increasingly distinguished between a military conflict and an energy war.

The lesson is unmistakable. The Middle East remains indispensable to global energy security, but today's oil market is more diversified, resilient and interconnected than ever before. As long as production continues, shipping lanes remain open and alternative suppliers keep the market well supplied, oil will struggle to serve as an effective geopolitical weapon. The era when a Middle East conflict automatically plunged the world into an oil crisis may well be coming to an end.

Growing lust for controlling energy routes

The Red Sea is not merely another conflict zone in the Middle East. It has become the latest theatre in an intensifying struggle for control over the world's most critical maritime trade and energy corridors. Following prolonged disruption in the Strait of Hormuz, renewed threats to commercial shipping in the Red Sea suggest that the contest has moved beyond territorial disputes to a broader competition over strategic chokepoints that sustain the global economy.

Much of the international debate remains focused on Yemen's Houthi movement and its attacks on commercial vessels. The Houthis have publicly linked their operations to the Gaza conflict and have demonstrated the capability to target shipping with drones and missiles. Western governments also maintain that Iran provides the group with varying degrees of political, military and technical support. These developments are important, but they do not fully explain the strategic significance of what is unfolding.

The Red Sea and the Strait of Hormuz are connected by more than geography. Together, they form the principal maritime gateway through which a substantial share of Gulf oil, liquefied natural gas and international trade reaches global markets. Disruption at either chokepoint unsettles energy markets. Simultaneous instability at both has the potential to reshape global trade flows, increase transport and insurance costs, fuel inflation and slow economic growth far beyond the Middle East.

This raises an important strategic question: Is the objective simply to disrupt shipping, or to increase the strategic vulnerability of Gulf energy exporters?

Publicly available evidence does not allow a definitive answer. However, it is beyond dispute that prolonged insecurity in these sea lanes weakens the commercial position of Gulf exporters, reduces the attractiveness of the Red Sea–Suez route, and increases dependence on alternative transport corridors. Whether these outcomes are intended or incidental, they carry profound geopolitical consequences.

Modern warfare has evolved. Economic disruption has become a strategic instrument alongside military force. Countries and non-state actors increasingly seek to influence rivals by targeting supply chains, energy infrastructure, financial systems and maritime trade rather than engaging in conventional battlefield confrontations. In this environment, the ability to threaten a strategic waterway may generate political leverage disproportionate to military strength.

Yemen illustrates this reality. A country with limited conventional military power occupies territory overlooking the Bab el-Mandeb Strait, one of the world's most important maritime chokepoints. Geography has given the Houthis an influence extending far beyond Yemen's borders. Their actions demonstrate how relatively inexpensive drones and missiles can compel some of the world's most advanced naval forces to devote enormous resources to protecting commercial shipping.

The question of who benefits also deserves careful examination. The immediate economic losers are evident: Gulf Arab exporters face higher shipping costs and insurance premiums; Egypt risks losing valuable Suez Canal revenue; Europe and Asia confront longer supply routes; global shipping companies absorb higher operating costs; and consumers ultimately pay more. At the same time, prolonged instability can strengthen the strategic position of actors seeking higher energy prices, expanded defence spending, greater geopolitical leverage or a reconfiguration of regional influence. Identifying potential beneficiaries does not establish responsibility, but it is an essential element of serious geopolitical analysis.

The continued vulnerability of commercial shipping despite the deployment of powerful multinational naval forces exposes another important reality. Maritime security in the twenty-first century can no longer be guaranteed solely through conventional naval superiority. Low-cost drones, precision missiles and asymmetric tactics have fundamentally altered the economics of maritime conflict, enabling comparatively weak actors to impose substantial costs on much stronger adversaries.

For policymakers, the central lesson is clear. Viewing the Red Sea crisis solely through the lens of Yemen risks overlooking the larger strategic transformation taking place. Control of maritime chokepoints is becoming one of the defining features of contemporary geopolitics. The competition is no longer confined to territorial boundaries; it increasingly revolves around the ability to influence global commerce, energy supplies and supply chains.

History repeatedly demonstrates that control over trade routes often proves as decisive as victories on the battlefield. From the Strait of Hormuz to the Bab el-Mandeb and the Suez Canal, the struggle for maritime access is shaping the strategic landscape of the twenty-first century. The real question, therefore, is not whether the Red Sea crisis began in Yemen. It is whether the world is witnessing the emergence of a new era in which control of sea lanes becomes the principal instrument of geopolitical power.

Technological Superiority Cannot Guarantee Victory

For months, I have been convinced that President Donald Trump has pursued a strategy aimed at securing nothing less than Iran's unconditional surrender. More than five months into the conflict, however, that objective remains unfulfilled despite the overwhelming military and technological superiority of the United States and Israel. This raises a fundamental question; can military dominance alone compel a determined nation to surrender?

The conflict has steadily moved beyond its originally stated objective of curbing Iran's nuclear and missile programs. Instead, it increasingly appears to have become an effort to weaken the Iranian state itself. The repeated attacks on Iranian infrastructure have intensified human suffering and drawn criticism from those who argue that such operations risk violating international humanitarian law. Whatever the legal verdict may ultimately be, the war has expanded far beyond its declared purpose.

Ironically, the countries paying an increasingly heavy price are America's Arab allies. By hosting US military bases, they have become vulnerable to retaliation despite having little direct stake in the conflict. Their economies, energy infrastructure, shipping routes, and national security now face growing risks as the confrontation deepens.

The greatest lesson of this conflict is that technological superiority cannot guarantee victory against a dispersed and resilient adversary. Precision-guided weapons, advanced intelligence, and air superiority have not eliminated Iran's ability to respond. Even many Western analysts acknowledge that Tehran retains the capability to launch missiles and drones against American military installations, Gulf allies, and commercial shipping transiting the Strait of Hormuz. As long as that capability exists, expectations of forcing Iran into unconditional surrender appear unrealistic.

If President Trump refuses to alter course, America's Arab partners may eventually conclude that protecting their own national interests requires a different approach. They should insist that offensive military operations against Iran are no longer conducted from bases located on their territory and seek a transparent timetable for redefining the role of foreign military forces. If those bases cease to be launch pads for attacks, Iran would have far less incentive to target Arab states.

Any durable regional security arrangement should also include China, whose growing economic and diplomatic influence makes it an indispensable stakeholder in Gulf stability.

My greatest concern is that trust has been severely damaged. The current war erupted while diplomatic engagement was still underway, making future negotiations far more difficult. Peace cannot rest on demands for unconditional surrender. It requires credible diplomacy, mutual security guarantees, and respect for commitments. The enduring lesson of this conflict is unmistakable: technological superiority may win battles, but it cannot, by itself, guarantee political victory.

Growing Discontent Across the Arab World

As the conflict between the United States and Iran enters a more dangerous phase, another challenge is quietly emerging across the Middle East. While global attention remains focused on air strikes, missile exchanges and military strategy, America's Arab partners are confronting a growing strategic dilemma. The longer the war continues, the greater the political, economic and security costs they will have to bear. For many Arab governments, patience is not unlimited.

For decades, the United States has been the principal security partner of several Gulf states, maintaining military bases and providing strategic protection against external threats. Today, however, those same military installations have become potential targets for Iranian retaliation. Every attack on a US base in the Gulf exposes the host country to risks it neither initiated nor seeks.

As tensions escalate, Arab governments face the difficult task of preserving their security partnerships with Washington while preventing their own territories from becoming battlefields in a widening regional conflict.

The economic implications are equally serious. Gulf economies are no longer driven solely by oil exports. Through ambitious diversification programs, countries across the region are investing heavily in tourism, finance, technology, logistics and manufacturing. These reforms require political stability, investor confidence and uninterrupted trade. A prolonged war threatens all three. Rising insurance premiums, uncertainty in financial markets and disruptions to maritime commerce could undermine years of economic planning.

The Strait of Hormuz and the Red Sea remain two of the world's most important maritime corridors. Any disruption to these routes would directly affect the export-dependent economies of the Gulf and reverberate throughout the global economy. While energy prices have remained relatively stable so far, Arab leaders understand that a prolonged conflict could eventually jeopardize both regional prosperity and international energy security.

Equally significant is the political dimension. Across the Arab world, public concern over regional instability and humanitarian suffering continues to grow. Governments must balance their strategic ties with Washington against the expectations of their own citizens, who increasingly want their countries to avoid becoming participants in another prolonged regional war. This balancing act becomes more difficult with every passing day.

The conflict also threatens to reverse the diplomatic progress achieved in recent years. Several Arab states have worked to reduce regional tensions, rebuild diplomatic relationships and promote economic cooperation. A wider war could undo those gains, deepen regional polarization and weaken collective efforts to build a more stable Middle East.

History offers a sobering lesson - wars in the Middle East rarely remain confined to their original battlefield. These spill across borders, reshape alliances and leave behind long-lasting political and economic consequences. Military victories may be celebrated in the short term, but the costs of prolonged conflict are borne by entire societies.

For America's Arab partners, the overriding priority is not the military defeat of Iran or the strategic success of Washington. Their foremost interest lies in safeguarding their sovereignty, protecting their economies and preserving regional stability. As the costs of continued escalation mount, pressure for diplomacy will inevitably grow.

The longer the war continues, the greater the Arab world's discontent—and the stronger the demand for a political solution that ends the cycle of confrontation before it engulfs the entire region.

 

Seven Days of US Strikes, No Strategic Breakthrough

Seven consecutive days of United States air strikes on Iran have raised a fundamental question, has Washington moved any closer to achieving its strategic objectives? Judging by the available evidence, the answer appears far from convincing. Military campaigns are ultimately measured not by the number of missiles fired, but by the political and strategic outcomes they produce.

Despite the intensity of the operation, remarkably little official information has been released about the military targets destroyed or the extent of the damage inflicted. In modern warfare, governments are usually quick to showcase decisive battlefield successes. The absence of detailed battle damage assessments has inevitably fueled speculation that the campaign has yielded fewer tangible results than expected.

Equally concerning are reports that civilian infrastructure and public utilities have been affected. If the intention is to increase economic hardship and public suffering in the hope of provoking unrest against Tehran, such a strategy carries significant legal, moral and political risks. Under international humanitarian law, deliberate attacks on civilian objects that are not legitimate military targets could raise serious questions about compliance with the laws of armed conflict. Greater transparency is therefore essential.

The broader strategic picture also remains uncertain. One apparent objective has been to pressure Iran by disrupting regional energy security through the Strait of Hormuz. Yet global oil markets have remained relatively calm, with crude prices staying below the psychologically important threshold of US$100 per barrel. Markets appear unconvinced that energy supplies will face prolonged disruption.

Attention is now increasingly focused on the Red Sea, another critical maritime corridor for global trade and Gulf energy exports. Any escalation there would broaden the conflict, increase risks to international shipping and place additional economic and political pressure on Arab oil-exporting states.

Perhaps the campaign's most significant consequence has been political rather than military. Iranian retaliatory strikes against American military installations in Gulf countries have heightened regional tensions and risk fuelling anti-American sentiment. For governments hosting US military bases, the political cost of continued escalation could become increasingly difficult to manage.

History offers a consistent lesson - air power can destroy military assets and infrastructure, but it rarely secures lasting political victories on its own. If anything, sustained external military pressure often strengthens national resolve rather than weakens it.

After seven days of strikes, Washington appears to have achieved neither a decisive military breakthrough nor a clear political advantage. Unless diplomacy regains priority, the conflict risks expanding while the prospects for a durable peace continue to diminish.

PSX benchmark index down 3.5%WoW

Pakistan Stock Exchange (PSX) remained under pressure during the week ended on Friday, July 17, 2026. The benchmark index closed the week at 175,803, down 6,439 points or 3.5%WoW, with average daily trading volume declining to 911 million shares, down 29%WoW.

During the week market driven by uncertainties surrounding the US-Iran conflict, with the US threatening to strike Iran’s energy facilities.

Re-imposition of the naval blockade of Strait of Hurmuz pushed oil prices above US$86/bbl, the highest level since the MOU was signed between the two countries.

On the macroeconomic front, Current Account posted a deficit of US$139 million in FY26, as against a US$1.8 billion surplus during the same period last year.

Net FDI dropped 34%YoY to US$1.6 billion in FY26.

Foreign exchange reserves held by State Bank of Pakistan (SBP) decreased by US$1.2 billion to US$17.2 billion as of July 10, 2026, due to debt repayments.

LSM index increased by 6%YoY in 11MFY26.

Auto sales rose 33%YoY for the industry in FY26 to 244,000 units, led by stable prices, lower financing rates, and discount offers by OEMs.

IT exports surged 21%YoY to a record high of US$4.6 billion in FY26.

Other major news flow during the week included: 1) HSD/MS price are likely to be increased over the weekend, 2) Electricity generation marginally increased by 1%YoY in FY26, 3) Textile exports inched up to US$17.9 billion in FY26, 4) Largest LNG carrier berthed at Port Qasim, and 5) Pakistan, Saudi Arabia agreed to expand energy cooperation.

Active sectors were: Jute, Refinery, and Technology & Communication, while lagged included: Textile Weaving, Synthetic & Rayon, and Transport.

Major selling was recorded by Mutual Funds amounting to US$37.6 million, while major buyers were Foreigners and Individuals aggregating to US$33.2 million.

Top performing scrips were: PIOC, CNERGY, and TPLRF1, while laggards included: IBFL, KTML, YOU, KEL, and ISL.

According to AKD Securities, any positive progress on US-Iran conflict, along with moderating international oil prices towards pre-conflict levels would remain the key focus.

Additionally, favorable financial results for the period ended June 30, 2026 would support market sentiment in the near term. Market continues to trade at attractive valuations.

Top picks of the brokerage house include OGDC, PPL, UBL, MEBL, HBL, FFC, ENGROH, PSO, LUCK, FCCL, INDU, ILP and SYS.

Why Is Iran Reluctant to Attack Israel Directly?

Every time hostilities flare in the Middle East, a familiar pattern emerges. Israel strikes Iranian targets, and Iran often retaliates by targeting US military installations or interests in the region rather than launching a sustained direct attack on Israel. This recurring pattern raises an intriguing question, if Israel is Iran's declared adversary, why does Tehran so often avoid direct military confrontation?

The answer lies not in fear alone but in strategic calculation.

Iran understands that a large-scale attack on Israel would almost certainly trigger an overwhelming response. Israel possesses formidable military capabilities and enjoys unwavering political, diplomatic, and military backing from the United States. A direct war could inflict severe damage on Iran's military infrastructure, economy, and internal stability. No responsible government willingly enters a conflict where the costs are likely to far outweigh the gains.

Military realities reinforce this caution. Israel has developed one of the world's most sophisticated, multi-layered missile defense systems. While these defenses cannot intercept every missile or drone, they substantially reduce the effectiveness of mass attacks. Iran must therefore consider whether expending expensive missiles would achieve meaningful military objectives or merely expose the limitations of its own arsenal.

Geography further complicates the equation. Iran and Israel do not share a common border. Any missile or drone attack must cross or approach the airspace of several regional states. Countries such as Jordan have, on occasion, intercepted projectiles traversing their airspace to protect their own national security. These operational challenges make sustained direct attacks considerably more difficult.

Instead, Iran has adopted what appears to be a strategy of calibrated retaliation. Rather than seeking decisive military victory, it aims to impose costs while preventing the conflict from escalating into a regional war. This explains Tehran's preference for targeting US military bases, conducting cyber operations, disrupting maritime traffic, and relying on allied armed groups to project influence.

From Iran's perspective, the United States is not merely Israel's ally but its principal strategic enabler. Washington provides military assistance, intelligence, advanced weaponry, and consistent diplomatic support. Consequently, Tehran may calculate that increasing pressure on American military assets sends a message to both Washington and Tel Aviv without immediately crossing the threshold of an all-out war.

This does not mean Iran lacks the capability or the willingness to strike Israel directly. It has done so under exceptional circumstances. However, those attacks have generally been carefully measured, suggesting that deterrence and escalation management remain at the heart of Iranian strategy.

The Middle East is often viewed through the lens of ideology and rhetoric, yet military decisions are usually driven by hard strategic calculations. Iran's conduct reflects this reality. Rather than pursuing an unrestricted war with Israel, Tehran appears to be balancing retaliation with restraint, seeking to preserve its deterrent capability while avoiding a conflict that could threaten the survival of the Iranian state.

Understanding this distinction is essential. In geopolitics, actions are rarely dictated by slogans alone. More often, they are shaped by the cold arithmetic of power, capability, and consequence.