Who holds the cards?

Having departed Pakistan on Saturday just as the US was preparing to send emissaries to discuss the war, Iranian Foreign Minister Abbas Araghchi eventually popped up for talks with Vladimir Putin in St. Petersburg, where he said Tehran is committed to strengthening its partnership with Moscow, reports Bloomberg.

Araghchi’s geopolitical chess move came after a dissonant weekend of potential feints and false starts in the effort to end the US-Israel war with Iran. As news broke that the Iranian official was leaving Islamabad, Trump announced he was canceling the trip by Steve Witkoff and Jared Kushner, in part because the US “has all the cards.”

Iran has told Pakistan, which is operating as an intermediary, that it would cease obstruction of the Strait of Hormuz if the US ended its naval blockade of Iranian shipping. Under its plan, negotiations over Iran’s nuclear research would be dealt with later, Axios reported.

While the White House said it hasn’t changed its position on “red lines” associated with Iran’s atomic program, the administration said it was nevertheless discussing the Iranian proposal.

None of this back and forth sat well with energy markets Monday, the eve of the war’s two-month anniversary. Brent crude prices rose for a sixth straight session to settle above US$108 a barrel. And at least one European leader angered by the high energy prices the continent is paying thanks to the conflict was less than diplomatic in his assessment.

The US “is being humiliated by the Iranian leadership,” German Chancellor Friedrich Merz said Monday, adding he didn’t see “what strategic exit the Americans are now choosing.” Tehran’s negotiators, the German leader said, are proceeding “very skillfully—or indeed very skillfully not negotiating.”

Blockade as a Weapon

The United States’ long-running pressure campaign against Iran raises a harder question: when does coercion begin to disrupt the global order? After decades of sanctions, the central objective remains unmet—Iran has not abandoned its nuclear program. Yet Washington appears to be escalating, moving beyond economic pressure toward actions that constrain passage through the Strait of Hormuz.

The demand that Iran halt uranium enrichment remains contested. As a signatory to the Treaty on the Non-Proliferation of Nuclear Weapons, Iran retains the right to peaceful nuclear activity. Critics cite compliance and inspection concerns, but dismissing treaty entitlements outright risks eroding the credibility of the very frameworks meant to regulate nuclear conduct.

Washington justifies its posture through deterrence and regional security. Yet restrictions on Hormuz carry systemic consequences—disrupting energy flows, constraining oil exporters, and imposing costs on major importers such as China, turning a bilateral dispute into a broader geo-economic contest.

Equally significant is the human dimension. Merchant vessels and seafarers become entangled in strategic signaling, raising concerns about proportionality under maritime norms.

Framed as strategy, such measures still function as instruments of pressure on civilian economies and global trade—effectively turning blockade into a weapon that demands closer legal and academic scrutiny.

Security Scare at the White House

An alleged gunfire scare at the White House during a journalists’ dinner has triggered concern—but even more than concern, it has triggered doubt. In a place defined by airtight security, such an episode is either a serious breach or a serious failure of explanation. Both are equally damaging.

Let us begin with the obvious, the White House is among the most secure facilities in the world. Layers of intelligence, screening, and armed protection are designed precisely to prevent such scenarios. The suggestion that a weapon could be carried anywhere near a high-profile gathering strains belief. If this happened, it signals an alarming breakdown. If it did not happen as suggested, then clarity is being sacrificed.

The next line of failure lies in the vetting of invitees. Events involving journalists and senior officials are subject to rigorous checks. Entry is not casual; it is controlled, verified, and monitored. Any lapse here is not minor—it reflects systemic weakness in procedures that are assumed to be foolproof.

The communication surrounding the incident adds another layer of concern. The role of the Press Secretary is to provide facts with clarity. Yet the presentation of this episode appears carefully shaped, raising a legitimate concern that perception is being managed as much as information is being shared. In sensitive situations, even a hint of narrative control undermines trust.

Equally disappointing is the media’s response. Instead of interrogating inconsistencies, parts of the press seem content to amplify the spectacle. A potential security lapse should provoke scrutiny, not serve as a ratings opportunity. When journalism drifts toward dramatization, public confidence erodes further.

Finally, the silence of the educated elite stands out. Incidents of this magnitude demand questioning, debate, and accountability. The absence of critical engagement suggests a worrying complacency among those expected to challenge official narratives.

Whether this was a genuine breach or an exaggerated scare, the larger issue is credibility. Institutions weaken not only through failure, but through unanswered questions—and the unwillingness to confront them.

Recasting Failure in US–Iran Talks

My conclusion is stark - the United States must accept its defeat, ensure the full reopening of the Strait of Hormuz, withdraw the economic sanctions imposed on Iran, and pay for the damages caused during this war. Anything less would not be diplomacy—it would be denial repackaged as success.

The ongoing negotiations between the United States and Iran are increasingly shaped by narrative management rather than strategic success. What began as a forceful campaign—closely aligned with Israel—to curb Iran’s regional influence and nuclear trajectory has delivered outcomes far removed from its declared objectives.

Washington promised deterrence, rollback, and compliance. Instead, Iran’s regional posture remains intact, its negotiating leverage has hardened, and its capacity to absorb economic pressure has proven more resilient than anticipated. Even after weeks of conflict, talks remain “far from a breakthrough,” with fundamental disagreements unresolved.

Meanwhile, the situation around the Strait of Hormuz underscores the scale of miscalculation. Shipping through the strait has collapsed dramatically—from around 140 vessels a day to barely a handful—disrupting nearly a fifth of global oil and LNG flows and sending shockwaves through global markets.

The fallout has been indiscriminate: oil-exporting Arab states face revenue uncertainty, while energy-importing economies grapple with inflationary pressure and supply disruptions.

Yet, despite these outcomes, the language from Washington has shifted toward “progress” and “opportunity.” This is less a reflection of facts and more an attempt to reframe strategic underperformance as diplomatic achievement. The absence of a clear exit strategy, coupled with rising global economic costs, only reinforces the perception of a policy that has drifted without delivering.

This brings the debate to its unavoidable conclusion. Strategic overreach, when left unacknowledged, does not fade—it compounds. The longer reality is denied, the greater the cost imposed on others.

My conclusion is stark - the United States must accept its defeat, ensure the full reopening of the Strait of Hormuz, withdraw the economic sanctions imposed on Iran, and pay for the damages caused during this war. Anything less would not be diplomacy—it would be denial repackaged as success.

PSX benchmark index down 1.9%WoW

Pakistan Stock Exchange (PSX) witnessed reversal of momentum during this past week, the benchmark index shed 3,267 points, down 1.9%WoW to close at 170,672, as investors tried to understand more complex geopolitical realities following last week's ceasefire driven rally.

The average daily trading volume rose to 1,665 million shares - up 31.7%WoW, with investor risk appetite witnessing pullbacks as US-Iran diplomatic talks encountered fresh hiccups. However, sentiment returned during second half of Friday’s session as Iran confirmed the arrival of its foreign minister to Pakistan over the weekend.

Furthermore, US president’s indefinite extension of the ceasefire on Tuesday, hours before its expiry kept hopes of resolution alive and prevented a material selloff as well.

Oil prices rose 3.2%WoW to US$104.8/ bbl, as Iran's seizure of two container vessels attempting to transit the Strait of Hormuz reignited supply disruption fears.

On the macroeconomic front, IMF’s executive board is expected to consider approval of the fourth tranche of the 37-month program during May’26.

Foreign exchange reserves held by State Bank of Pakistan (SBP) rose to US$15.1 billion.

Other major news flow during the week included: 1) Pakistan ups Eurobond issuance to US$750 millio, 2) IMF to vet auto policy before cabinet, 3) IMF urges removal of non-tariff curbs, 4) Pakistan seeks LNG spot cargoes after December, and 5) First Central Asian shipment reaches Pakistan via China.

Top active sectors were: Textile Weaving, Refinery, Synthetic & Rayon, while lagged included: Jute, Pharmaceuticals, and Cement.

Major selling was recorded by Insurance, and Other Organization aggregating to US$16.9 million. Individuals and Companies emerged net buyers with US$17.2 million.

Top performing scrips included: YOUW, ATRL, GADT, IBFL, and MUREB, while laggards included: PIOC, DGKC, ISL, CPHL, and MLCF.

AKD Securities believes that a constructive resolution would remain the pivotal near-term catalyst for the market direction, with any positive developments over the weekend becoming the trigger.

According to the brokerage house, despite the recent recovery, market continues to trade at attractive values.

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

 

Israel: Promise of Stability Remains Fragile

At 78, Israel remains a study in contrasts—secure yet unsettled, integrated yet isolated within its immediate neighborhood. Its relations with bordering states reveal a pattern shaped less by reconciliation and more by necessity.

With Egypt and Jordan, Israel has maintained durable—if cold—peace. The framework established after the Camp David Accords continues to hold, anchored in security coordination and shared concerns over militancy and border stability. These ties are transactional, not transformative, reflecting mutual restraint rather than genuine normalization.

On its northern front, the equation turns volatile. Lebanon remains locked in a cycle of tension with Israel, largely driven by the influence of Hezbollah. Deterrence has prevented full-scale war in recent years, but the absence of a political settlement ensures that the border remains one miscalculation away from escalation.

In Syria, hostility persists in a more fragmented form. Israel’s periodic strikes targeting Iranian-linked assets underscore a broader contest with Iran for regional influence. Syria’s internal disarray has limited direct confrontation but has also entrenched a shadow conflict that resists closure.

The most enduring and consequential relationship remains with Palestine. Here, there is neither peace nor stable deterrence—only recurring cycles of confrontation. The unresolved status of Palestinians continues to define Israel’s regional image and constrains its acceptance among Arab publics, regardless of evolving state-level ties.

At 78, Israel has achieved military superiority and economic resilience, yet its neighborhood tells a more restrained story. Peace exists, but without warmth. Conflict is contained, but not resolved.

The result is a strategic environment where coexistence is managed, not embraced—and where the promise of stability remains persistently fragile.

What Next? Escalation not a solution

As the fragile truce nears its end, the diplomatic space between United States and Iran appears to be narrowing rather than expanding. Signals from both sides suggest that compromise remains elusive. If Tehran refuses to accept Washington’s terms—as appears likely—the question is no longer whether tensions will rise, but how far escalation might go.

Rhetoric from Donald Trump has reinforced a posture of maximum pressure, where the implicit belief is that overwhelming force can compel compliance. Yet history offers a more sobering lesson: coercion against resilient states rarely produces submission. Instead, it hardens positions and invites asymmetric responses.

Iran’s strategic doctrine is built precisely for such scenarios. Without matching conventional military strength, it retains the capacity to disrupt through missile reach, proxy networks, and its geographic proximity to critical energy corridors. Even a limited confrontation could unsettle the Gulf, placing key oil infrastructure at risk and sending shockwaves through global markets. In such a scenario, the very objective often attributed to US strategy—securing long-term influence over energy flows—would be undermined by instability and destruction.

The risks are not confined to the immediate theatre. Escalation in the Gulf increases the probability of miscalculation, where unintended actors or incidents widen the conflict. Not every escalation becomes global, but the absence of clear off-ramps makes containment far more difficult once hostilities resume.

This is the central contradiction - a strategy designed to enforce compliance may instead erode control. Military superiority does not automatically translate into political outcomes, particularly in conflicts where the adversary’s threshold for pain is structurally higher and its response options more diffuse.

For Washington, the more effective path lies not in testing the outer limits of force, but in recognizing the limits of coercion itself.

A calibrated approach—however politically inconvenient—offers a better chance of preserving stability than a conflict whose consequences would be both immediate and enduring.