Who Will Control Strait of Hormuz?

The debate over the future control of the Strait of Hormuz has moved beyond naval deployments and freedom of navigation. It has become a question of sovereignty, regional power balance, and who will shape the security architecture of one of the world’s most important maritime corridors.

The basic question is straightforward: who will provide security to ships and their crews, and in return, who will collect charges for ensuring safe passage? Geographically, the Strait lies between Iran and Oman, making these two coastal states the natural stakeholders in any future arrangement.

For decades, the Gulf security framework was built around a strong American military presence. The United States played a major role in protecting maritime routes and reassuring regional allies. However, the geopolitical landscape has changed. Past arrangements no longer fully reflect current realities.

Iran, despite years of sanctions and pressure, has emerged as a major regional power with significant influence over Gulf security dynamics. Its location at the Strait of Hormuz provides it with a strategic position that cannot be ignored. Any future framework governing the waterway will have to acknowledge Iran’s role as a neighbouring coastal state.

At the same time, Arab states are reassessing the assumption that their long-term security can depend entirely on external guarantees. The perception that Washington’s regional priorities are closely linked with Israel’s security interests has encouraged some Gulf countries to reconsider the balance between strategic partnerships and regional self-reliance.

This does not mean that the United States has lost its influence in the Gulf. Its military presence, diplomatic reach, and economic relationships remain significant. However, influence is different from ownership. A foreign security role does not automatically translate into authority over a waterway located within the jurisdiction of coastal states.

The discussion over Iran’s proposed transit charge — reportedly around one dollar per barrel — highlights the larger issue. Financially, such a fee may appear limited when compared with global oil prices. The real significance is political: accepting such an arrangement would symbolize recognition of a greater regional role for Iran.

The Strait of Hormuz carries a substantial share of global energy supplies. Any disruption affects oil, gas, fertilizer, food costs, and global inflation. Therefore, the world has a direct interest in stability and predictable rules.

The future of Hormuz may not be determined only by military strength. It will depend on whether a new regional understanding emerges — one that balances international navigation rights with the legitimate interests of countries bordering the Strait.

The central question is no longer whether Iran and Oman have influence over Hormuz. They already do. The real question is whether the world is prepared for a new security arrangement where regional powers play a greater role in managing regional affairs.

Pak-Iran energy cooperation: Geopolitics Limits Economic Choices

For decades, Pakistan has relied on imported energy to meet its growing requirements. Crude oil, refined petroleum products and LNG have largely come from Saudi Arabia, Kuwait and Qatar, creating deep economic and strategic linkages with the Gulf region.

However, Pakistan’s energy map has also been shaped by geopolitical realities. Energy cooperation with Iran has remained limited, largely due to international sanctions on Tehran, particularly those imposed by the United States. The Iran-Pakistan gas pipeline remains one of the clearest examples of how strategic considerations can override economic logic.

At a time when Pakistan faces persistent energy shortages, high import costs and pressure on foreign exchange reserves, the question of affordable and diversified energy supplies has become increasingly important. Yet, despite recent improvement in Pakistan-US relations and public expressions of cooperation from both sides, the sensitive issue of Iranian energy imports remains largely absent from the discussion.

Pakistan also faces potential financial consequences linked to delays in implementing the Iran-Pakistan gas pipeline agreement. This highlights a broader dilemma: whether Pakistan’s energy decisions are being driven primarily by economic necessity or constrained by a larger geopolitical environment.

Iran, as a neighbouring country with significant energy resources, could theoretically provide Pakistan with another supply option. Any such engagement, however, would require Islamabad to carefully balance relations with Washington and its longstanding partnerships with key Gulf energy suppliers.

The issue is not simply about choosing one partner over another. Pakistan’s challenge is that energy security, diplomacy and global power politics are now deeply interconnected. In an ideal economic environment, the cheapest and most reliable energy source would naturally attract demand. In reality, international relations often influence commercial decisions.

This has led some analysts to question whether Pakistan has sufficient strategic space to pursue every economically attractive opportunity, including potential energy cooperation with Iran.

For Pakistan, the long-term objective must be an energy policy that maximizes national interest while managing external sensitivities. A country with growing economic ambitions cannot afford energy insecurity, but it must also navigate the complex realities of global alliances.

The emerging debate is therefore not only about Iran, sanctions or pipelines. It is about whether Pakistan can build an energy strategy where economic priorities and geopolitical realities find a workable balance.

Strait of Hormuz: Blockade Becoming a Geopolitical Instrument

The announcement of a truce between United States and Iran created expectations that tensions around the Strait of Hormuz would ease. However, the continued disruption of shipping activity, with vessels and crews still stranded, suggests that the crisis is far from resolved. The world’s most critical energy chokepoint remains under pressure — raising a fundamental question, is this merely a security crisis, or is it becoming a tool of geopolitical influence?

An emerging perception among some analysts is that the prolonged disruption may unintentionally — or strategically — serve the interests of certain global powers, including the United States. While such assessments require careful scrutiny, the geopolitical consequences are undeniable.

For the Gulf Arab states, the crisis has exposed the risks of relying excessively on external security guarantees. Over the years, several Gulf Cooperation Council (GCC) members have debated whether outsourcing regional security to Washington remains the most sustainable approach, particularly given America’s strong strategic alignment with Israel and its broader Middle East priorities.

The disruption of Hormuz also directly affects the economic interests of major Arab energy exporters. Any restriction on oil flows limits export revenues and creates additional pressure at a time when some Gulf states have been reassessing their security partnerships and strategic autonomy.

The situation has also complicated the regional diplomatic landscape. The initial momentum surrounding the Abraham Accords has faced growing challenges, with some GCC members showing greater caution about deeper engagement amid shifting regional realities.

At the same time, Iran’s energy exports remain under pressure. Any prolonged disruption affecting Iranian oil supplies, particularly shipments destined for China, adds another dimension to the wider US-China strategic competition. Energy security has increasingly become a component of geopolitical rivalry.

Meanwhile, the global energy market has undergone a historic transformation. The United States has emerged as one of the world’s largest oil producers and exporters while expanding its influence in LNG markets. In an environment where supply routes face uncertainty, energy producers with alternative capacity gain strategic importance.

However, the continuation of the crisis also carries significant risks. Higher energy costs, renewed inflationary pressures, and disruption of global trade could create consequences far beyond the Middle East.

The Strait of Hormuz is no longer merely a maritime passage for oil shipments; it has become a symbol of the intersection between energy, security, and global power politics. The critical question is not only who benefits from the disruption, but whether the long-term costs of using energy routes as instruments of strategic competition will outweigh the short-term gains.

OPEC Dilemma: More Oil, Less Revenue

The debate over Iraq’s possible reconsideration of its OPEC membership highlights a deeper challenge facing the global oil market - whether individual producers can protect their economic interests by increasing production, or whether collective discipline remains the only way to preserve value.

According to reports, Iraq is considering all options if OPEC does not allow a significant increase in its production quota. The concern is understandable. Oil remains the backbone of Iraq’s economy, and fiscal pressures have intensified after export disruptions and economic challenges. However, increasing production during a period of declining oil prices may provide more barrels, but not necessarily more revenue.

The reported exit of the United Arab Emirates and growing dissatisfaction among some producers indicate rising internal pressures within OPEC. This development also has wider geopolitical implications.

The United States, having achieved the position of the world’s largest oil producer and a major exporter, has an interest in a more competitive global oil market. A weakened OPEC, with members pursuing independent production strategies, could reduce the organization’s ability to influence global supply management.

However, history suggests that oil producers often suffer when they prioritize volume over value. If every major producer attempts to maximize output, the inevitable outcome is downward pressure on prices, reducing revenues for all exporters.

Saudi Arabia’s approach offers an important lesson. Despite possessing enormous production capacity, Riyadh has frequently supported supply discipline to maintain market stability. The objective is not simply to sell more barrels, but to ensure that each barrel generates maximum economic benefit.

Iraq and other oil-dependent economies must recognize that higher production quotas are not a guaranteed solution. Sustainable revenue growth requires economic diversification, better fiscal management, and reducing excessive dependence on crude exports.

The global energy landscape is changing rapidly. Demand patterns, technological advancement, and alternative energy sources are creating long-term uncertainty for oil producers.

In a declining oil price scenario, increasing production is not a prudent solution. The real challenge for oil-exporting countries is not how many barrels they can produce, but how intelligently they manage the value of the barrels they already have.

The Netanyahu Dilemma: When an Ally Becomes an Obstacle

For years, Benjamin Netanyahu built his political reputation around a powerful proposition: that he was the Israeli leader best positioned to ensure that Washington and Jerusalem remained firmly aligned, particularly on Iran.

His ability to cultivate strong support within American political circles, especially among Republicans, became one of his greatest strategic assets. His repeated warnings about Tehran, his opposition to the Iran nuclear agreement, and his direct engagement with the US political system reinforced the perception that Netanyahu possessed unmatched influence over American policy.

However, the emerging US-Iran understanding has exposed a growing gap between Washington’s broader strategic calculations and Netanyahu’s preferred approach.

The United States appears increasingly focused on containing escalation and preventing another prolonged Middle East conflict. While its commitment to Israel’s security remains intact, Washington seems less willing to allow one partner’s immediate priorities to determine the direction of its regional strategy.

This creates the Netanyahu dilemma.

An ally can remain a valued partner while its policies become difficult to reconcile with another country’s evolving interests. For Washington, the challenge is not abandoning Israel, but managing a relationship where strategic priorities are no longer perfectly aligned.

Netanyahu’s political strength was built on the belief that he could convince successive US administrations that maximum pressure on Iran was the only viable option. The current diplomatic shift suggests that this influence has limits.

The Israeli leader now faces a difficult domestic and international balancing act. Continuing confrontation risks deeper disagreements with Washington, while accepting diplomatic compromises may create political challenges at home.

The upcoming Israeli elections could become a turning point. Not because Washington controls Israel’s political choices, but because a change in leadership could naturally provide room for a different approach while preserving the broader US-Israel relationship.

Netanyahu entered the Iran conflict promising historic achievements — weakening Tehran, reducing the influence of its regional partners, and expanding Israel’s diplomatic breakthroughs. Yet the outcome has been far more complicated. Iran remains a significant regional actor, tensions continue, and the path toward wider normalization has become more uncertain.

The irony is that the leader who spent decades presenting himself as indispensable to Washington may now find his greatest political asset becoming a source of strategic friction.

History shows that alliances survive when they adapt to changing realities. The question facing Netanyahu is whether he can adjust to a new regional order — or whether his political legacy will be defined by the moment when a trusted ally became an obstacle to a different strategic path.

PSX shortened trading week closes almost flat

Pakistan stock Exchange (PSX) witnessed volatility during the shortened trading week, as the benchmark Index declined through the first two trading days before recovering in the final session to close at 179,571 points, up 0.4%WoW. Due to the rollover activity, market participation increased to average daily trading of 1.5 billion shares as compared to 1.4 billion shares in the prior week.

On the positive side was, the US and Iran formally agreed on a 60-day roadmap towards a final deal, sustaining the recent downward momentum in international oil prices, extending decline on expectations of smoother crude flows through the Strait of Hormuz.

Sentiments further improved by Iranian President's visit to Islamabad.

The National Assembly passed the PKR18.8 trillion FY27 budget, broadly favorable for key sectors including Cement, Steel, Refineries, Textiles, Pharma, and Technology, alongside reduction/ elimination of super tax for individuals and corporates.

Another positive was the reduction in petrol prices.

The T-Bill auction saw cut-off yields falling sharply across all tenors.

Broad money supply (M2) rose 9.2% FYTD to PKR44.2 trillion as of June 12, 2026 driven primarily by a 2.8%WoW increase in scheduled bank deposits.

Other major news flow during the week included: 1) Gulf oil tanker rates nearly doubled as Middle East producers accelerated crude exports, 2) Pakistan expected to save US$3.24 billion through conversion of the Jamshoro Power Plant, 3) Government and the oil industry reached an agreement on a stable petroleum pricing formula, and 4) GoP to handover PIA to new owners by the month-end.

The most active sectors were: Leather & Tanneries, Sugar & Allied Industries, and Textile Composite, while laggards included: Vanaspati & Allied Industries, Synthetic & Rayon, and Refinery.

Major buying was recorded by Companies of US$209.3 million, while major net selling was recorded by Foreigners of US$159.4 million.

Top performing scrips were:  KEL, SRVI, MLCF, ILP, and SNGP, while laggards included: SSOM, AIRLINK, TPLRF1, BAFL, and ABL.

According to AKD Securities, progress on US-Iran deal, along with International oil prices would remain the key focus. Additionally, ease in inflation amid decreased oil prices and favorable financial results for June 2026 would support market sentiment in the near term.

Market continues to trade at attractive valuations.

The brokerage house forecasts the benchmark index to reach 263,800 by end December 2026.

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

Brewing Crisis on Red Sea and Horn of Africa

While global markets remain focused on the Strait of Hormuz and the economic fallout from the US-Israel war on Iran, another geopolitical risk is quietly developing along a different but equally important maritime corridor — the Red Sea and the Horn of Africa.

The region has historically been a crossroads of competition, conflict, and strategic interests. Today, rising tensions between Ethiopia, its northern Tigray region, and Eritrea are reviving concerns that a fragile peace could unravel. The Horn of Africa has endured decades of instability, and any renewed confrontation could create a new security challenge at a time when the world economy is already facing multiple disruptions.

The risks extend beyond national borders. Ethiopia’s internal challenges, Eritrea’s strategic ambitions, and the continuing civil war in Sudan are creating overlapping crises that could draw in regional and external powers. What begins as a local dispute can quickly evolve into a broader geopolitical contest when it involves a region located next to one of the world’s most important shipping routes.

The Red Sea is not merely a regional waterway; it is a lifeline of global commerce. Connecting the Indian Ocean with the Mediterranean through the Suez Canal, it carries a significant portion of international trade, including critical energy shipments and container traffic. Any disruption to ports, shipping lanes, or maritime infrastructure would add further pressure to global supply chains already strained by geopolitical uncertainty.

The timing makes the situation even more concerning. The world is already watching developments around the Strait of Hormuz, another vital energy corridor. A simultaneous crisis affecting both routes could create a serious challenge for energy markets, increase freight costs, raise insurance premiums, and intensify inflationary pressures.

For policymakers and businesses, the message is clear - geopolitical risks are no longer confined to battlefields; they directly influence markets, trade flows, and economic stability. The experience of recent years has shown that supply chains can be disrupted rapidly when strategic chokepoints come under pressure.

The Red Sea crisis may not yet dominate global headlines, but ignoring early warning signals could prove costly. In an interconnected world, stability in distant regions has become a direct economic interest for every nation.

The storm clouds gathering over the Horn of Africa deserve attention before they become another global crisis.