US and EU Adapting Divergent Policies to Tackle Energy Crisis

The United States and the European Union appear to be pursuing divergent energy policies, exposing the tension between geopolitical commitments and economic necessities. While Washington is easing restrictions to facilitate Russian diesel supplies, Brussels is preparing another package of sanctions against Russian entities involved in the energy trade. Why are two Western partners responding so differently to energy insecurity?

The answer lies in their contrasting energy circumstances, domestic political pressures and strategic priorities.

The United States is facing a sharp rise in diesel prices, which reached US$6.32 per gallon on October 23, compared with US$3.63 a year earlier. With Brent crude approaching US$120 per barrel amid escalating Middle Eastern tensions, the pressure on President Donald Trump is mounting ahead of the November 3 midterm elections. His decision to facilitate Russian diesel supplies reflects an attempt to contain domestic fuel costs, even if it requires a pragmatic departure from the sanctions approach.

The first Russian tanker, carrying approximately 40,000 tons of diesel, is not expected to reach New York until November 7. Moreover, the shipment is too small to make a meaningful difference to a tight global diesel market. The agreement's immediate political significance may therefore exceed its practical impact on American consumers.

Interestingly, the US natural gas market presents a contrasting picture. Henry Hub futures have fallen to US$2.66 per million British thermal units (MMBtu), as abundant inventories, mild weather and recovering supplies outweigh strong liquefied natural gas demand. The United States faces expensive diesel even as domestic natural gas remains relatively cheap.

Europe, meanwhile, faces a serious natural gas challenge. Its benchmark TTF prices have climbed above €93 per megawatt-hour, their highest level since December 2022. Restricted Qatari LNG supplies, colder weather and storage levels below 75% have heightened concerns about winter energy security. Yet the EU is preparing further sanctions targeting Russian oil producers, refiners, traders and shipping entities.

This divergence reflects different calculations of economic necessity and geopolitical responsibility. Washington is prioritizing immediate domestic pressures, while Brussels remains committed to restricting Moscow's energy revenues following Russia's invasion of Ukraine. Both approaches involve trade-offs between strategic objectives and energy security.

Ultimately, energy markets do not respect political boundaries. If Washington is willing to reconsider restrictions when domestic needs demand it, Europe must also assess how its sanctions policy balances geopolitical objectives against economic resilience. The central question is whether political commitments can remain sustainable when the cost of energy security becomes increasingly difficult for consumers and businesses to bear.

US Faces a Worse Defeat in Iran Than in Afghanistan

The United States may be heading towards a strategic setback in Iran more consequential than its humiliating withdrawal from Afghanistan. The two conflicts differ fundamentally in their military, political and geographical realities. Afghanistan exposed the limits of American nation-building; Iran could expose the limits of American military coercion.

In Afghanistan, Washington had important advantages. Its 2001 military campaign relied heavily on the Northern Alliance, an indigenous force opposed to the Taliban government. American airpower, special operations forces and local allies rapidly brought down the Taliban regime.

Subsequently, Washington installed and supported a government that provided the political framework for a prolonged American military presence. Regional cooperation and access to supply routes enabled the United States to sustain its operations despite Afghanistan being landlocked. Yet, after two decades of intervention, the US-backed government collapsed in August 2021, forcing American forces to withdraw.

Iran presents a different strategic equation. Washington has no comparable indigenous force capable of readily replacing the Iranian government, nor can it assume that military pressure will produce political fragmentation. Iran possesses established state institutions, substantial military capabilities and the geographical advantage of being positioned along the Strait of Hormuz, a vital artery of global energy trade.

American military bases in GCC countries provide platforms for repeated air strikes. However, the ability to attack Iran from neighbouring territories is not equivalent to the ability to occupy its land, establish a sustainable military presence or impose a political settlement. After months of confrontation, the absence of an American ground presence inside Iran underscores the difference between possessing overwhelming firepower and translating it into control on the ground.

More importantly, external aggression can produce consequences contrary to those intended. A nation divided over domestic policies may still unite against a foreign adversary. Iran's national cohesion should not be taken for granted, but neither should Washington assume that military devastation will automatically trigger political surrender.

The ultimate test is not how many targets American forces destroy, but whether Washington can achieve its declared objectives at an acceptable military, economic and political cost.

Afghanistan demonstrated that military victory does not guarantee a sustainable political outcome. Iran could deliver an even more damaging lesson - a superpower may win battles, inflict enormous destruction and still lose the strategic contest. If Washington cannot translate its military superiority into a durable settlement on its terms, its eventual outcome in Iran could prove worse than Afghanistan.

Lana Zaki Nusseibeh: An Emirati Woman Aspiring to Lead the UN

Lana Zaki Nusseibeh, a senior Emirati diplomat and former ambassador to the United Nations, has emerged as a candidate for the organization’s top position. Nominated by the United Arab Emirates on October 21, 2026, she brings extensive experience in multilateral diplomacy. If elected, she would become the first woman to serve as UN Secretary-General, marking a historic milestone for the organization.

Nusseibeh served as the UAE’s Permanent Representative to the UN from 2013 to 2024. During her tenure, she held several prominent positions, including Vice-President of the UN General Assembly and President of the Executive Board of UN Women. She also presided over the Security Council during the UAE’s elected membership in 2022–2023. Her diplomatic experience spans international security, humanitarian affairs, sustainable development and institutional reform.

A significant feature of her candidacy is the collective endorsement of all six members of the Gulf Cooperation Council (GCC). This regional backing strengthens her credentials and could help her build support beyond the Arab world. Her nomination also raises the prospect of an Arab-backed woman reaching the highest position in the UN system.

Her prospects will depend, however, on the broader geopolitical landscape. The UAE’s close relations with Israel, formalized through the Abraham Accords, may work in her favour among certain Western political constituencies. Nevertheless, it would be premature to assume that these ties guarantee support from influential Jewish organizations or political lobbies.

Ultimately, her selection will depend on whether she can secure the necessary support in the UN Security Council, particularly from its five permanent members. Her diplomatic record and regional backing make her a credible contender, but the outcome will be shaped by international negotiations and competing geopolitical interests.

Trump’s Louder Rhetoric and the Limits of American Power

The louder Donald Trump’s rhetoric becomes, the more pressing a question emerges: has the US-led war on Iran delivered the strategic outcomes Washington promised? Military power can inflict enormous damage, but translating battlefield superiority into political submission is an altogether different challenge.

The decision to attack Iran while diplomatic negotiations were under way undermined the credibility of diplomacy itself. If negotiations can be interrupted by military action, what assurance can any adversary have that future American commitments will be honoured? The consequences extend beyond Tehran, weakening confidence in Washington as a negotiating partner.

The reported killing of Iran’s spiritual leader appears to have failed to produce the anticipated political transformation. Rather than compelling the Iranian leadership to surrender, the campaign has confronted the US with the resilience of a state whose institutions and national interests cannot simply be eliminated through targeted strikes.

At the outset, expectations were raised that the conflict would be short-lived. Yet a prolonged confrontation without Iranian unconditional surrender raises serious questions about the assumptions underpinning the military campaign. Escalating threats may project determination, but they cannot substitute for a credible exit strategy.

The Gulf Cooperation Council (GCC) countries face their own strategic dilemma. If their military installations are perceived as serving Israel’s security more directly than their own, the political justification for hosting foreign forces becomes increasingly contentious. Regional security arrangements cannot remain sustainable without the confidence of host countries and their populations.

The Strait of Hormuz presents another contradiction. Restricting Iranian oil exports may impose costs on Tehran, but disruption to maritime trade also threatens Arab oil producers through reduced export opportunities, higher transport costs and uncertainty over energy revenues. Economic pressure is rarely a one-sided instrument.

Meanwhile, Iran’s ability to withstand the campaign may reinforce perceptions of its military resilience and regional influence, regardless of the physical damage it has suffered.

Reports of Trump seeking Russian diesel supplies would add another uncomfortable dimension if confirmed, even a superpower can face practical vulnerabilities when geopolitical confrontation disrupts energy markets.

Ultimately, the measure of American power is not the volume of presidential rhetoric but the ability to achieve sustainable political objectives. If coercion fails to secure submission, Washington must reconsider whether escalation is strengthening its position—or exposing the limits of military supremacy.

PSX benchmark index declines 2.4%WoW

Pakistan Stock Exchange (PSX) experienced volatility during the outgoing week amid continued Houthi attacks on Saudi Arabia, with news of the US planning an attack on Iran after midterm elections.

The benchmark Index declined by 4,045 points or 2.4%WoW to close at 162,375 on Friday, October 23, 2026. Average daily trading volume declined by 13.4%WoW to 496 million shares.

Brent crude futures climbed by 6.4%WoW to US$114.9/ bbl as of Friday. Meanwhile, local HSD and Petrol prices declined attributed to a decline in refinery crack cap by authorities and relatively stable Dubai crude oil prices.

On the macroeconomic front, FY26 GDP growth revised slightly down to 3.65% from provisional estimates of 3.7% as compared to 3.1% in FY25.

The World Bank projected FY27 GDP growth at 3.8% and inflation at 8.2% (7.1% in FY26).

Foreign exchange reserves held by State Bank of Pakistan (SBP) increased to US$21.49 billion as of October 16, 2026.

Banking sector deposits rose 16%YoY to PKR40.8 trillion at end September 2026.

Consumer auto financing increased 33.6%YoY to PKR407 billion in September 2026 (up for the 22nd consecutive month).

Urea offtakes rose 42%YoY to 611,000 tons in September 2026 amid channel inventory build-up ahead of the Rabi season, whereas DAP offtakes declined 30%YoY to 68,000 tons amid higher local prices.

Power generation grew 6%YoY in 1QFY27 amid recovery in electricity consumption.

Cotton arrivals increased 8%YoY to 4.1 million bales as of October 15, 2026.

Other major news flow during the week included: 1) Finance Minister sought Fitch’s view on what Pakistan needs to move into the BB rating category, 2) Prime Minister approved the draft of Auto Policy for five years, 3) Weekly SPI rose 0.65%WoW and 11.85%YoY, 4) Privatization Commission pre-qualified 10 bidders for IESCO, and 5) Power sector circular debt rose to PKR1.7 trillion, while gas sector liabilities increased to PKR3.6 trillion as of Jun 30, 2026.

Top performing sectors were: Modarabas, Sugar & Allied Industries, and Leasing Companies, while laggards included: Refinery, Technology and Communication, and Woolen.

Major net selling was recorded by Mutual Funds (US$10.2 million) and foreigners (US$5.7 million), while major buyers were Individuals (US$14.0 million.

Top performing scrips were: THCCL, UPFL, PSEL, TPLRF1, and BWCL, while laggards included: PTC, PGLC, AHCL, ATRL, and KAPCO.

AKD Securities expects the market to improve on the back of strengthening economic indicators.

The brokerage house expected upcoming MPC meeting as a major catalyst and predicts the central bank to maintain the status quo.

Any positive development on Middle East conflict could moderate international oil prices and serve as a key trigger for market as it paves the way for monetary easing.

The 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.

Pakistan’s Textile Industry

Perpetual Dependence on Preferential Treatment

Pakistan’s textile industry is once again seeking government intervention to safeguard its preferential access to the European Union under the GSP+ regime. In a letter dated October 22, 2026, the Pakistan Textile Council (PTC) urged Prime Minister Shehbaz Sharif to mobilize federal ministries and provincial governments to meet the EU’s requirements. While protecting export markets is a legitimate concern, the industry’s persistent dependence on government support raises a fundamental question, when will it learn to compete on merit rather than concessions?

For decades, Pakistan’s textile and clothing industry has benefited from cheap cotton, textile quotas and preferential market access under the GSP and GSP+ regimes. Yet, barring a few islands of excellence, much of the industry has failed to undertake adequate balancing, modernization and replacement (BMR), upgrade technology, improve quality standards and develop internationally competitive products. Its preference for exporting raw cotton, yarn and intermediate goods rather than moving decisively towards higher-value finished products reflects a persistent failure to capture greater value from the country’s resources.

Preferential access can provide breathing space, but it cannot substitute for productivity, innovation, compliance and efficient resource utilization. An industry that repeatedly seeks official intervention while neglecting structural weaknesses should not be surprised when competitors gain ground. Cheap inputs and tariff concessions may improve margins temporarily, but they cannot indefinitely compensate for inadequate investment, inconsistent quality and weak competitiveness.

The stakes are considerable. In FY2025-26, the EU-27 absorbed US$7.103 billion, or 39.5% of Pakistan’s textile and apparel exports. Yet sector exports to the bloc declined by 2%. Meanwhile, India is pursuing deeper trade integration with the EU, while Bangladesh is exploring closer trade ties. These developments expose Pakistan’s vulnerability to changing trade preferences.

The EU’s emphasis on human rights, labour standards, the rule of law and environmental protection must also be treated as more than bureaucratic hurdles. Compliance is integral to sustainable participation in modern global supply chains.

The government should pursue GSP+ retention through credible reforms, but the industry must reciprocate by investing in technology, skills, product development and value addition. Preferential access should be a bridge towards competitiveness, not a permanent crutch.

Pakistan cannot build a resilient export economy by repeatedly negotiating concessions while postponing the reforms needed to compete without them.

US-Iran War: Will Trump Pay the Price at the Midterms?

The US–Iran war may become President Donald Trump’s biggest political liability ahead of the November 3 midterm elections. Two contrasting outcomes are possible: Republicans could gain seats if Trump delivers a convincing victory, or lose ground if voters blame him for an inconclusive war, soaring energy costs and economic uncertainty. The balance appears to favour the second scenario.

Trump’s approval rating has fallen to a record low, while rising gasoline prices and disruptions to global energy supplies are adding to public discontent. The effective closure of the Strait of Hormuz has complicated Washington’s efforts to stabilize oil markets, while the absence of a credible exit strategy raises questions about the war’s ultimate objectives.

Iran, too, appears to understand the political stakes. By keeping negotiations alive without rushing towards a settlement, Tehran hopes to deny Trump a diplomatic victory before the elections. Its calculation is straightforward - the longer the conflict continues, the greater the potential political cost for the White House. Yet this strategy is not without risks, as sanctions, the US maritime blockade and economic hardship are also hurting Iran.

The real battlefield may therefore be shifting from Iran to the American ballot box.

For Democrats and other defenders of institutional checks and balances, the midterms offer an opportunity to curb Trump’s political power. Having failed to remove him through impeachment, his opponents may seek to achieve through elections what they could not accomplish through Congress’s removal process.

A Democratic victory would not dislodge Trump from the presidency, but control of either chamber could strengthen congressional oversight, obstruct parts of his legislative agenda and intensify scrutiny of his conduct of the war.

My assessment is that Republicans face a greater risk of losing seats than making significant gains. American voters may be less interested in claims of military success than in the cost of the conflict, its uncertain outcome and its impact on their daily lives.

The November 3 elections could thus deliver a powerful message - a president may initiate a war, but he cannot dictate how voters judge its consequences.