PSX benchmark index up 3.0%WoW

Pakistan Stock Exchange (PSX) witnessed bullish sentiments on Monday and the benchmark index gained 7,241 points, led by a pause in US-Iran strikes, which raised hopes of a diplomatic solution and caused oil prices to fall below US$85/bbl. However, with no lasting resolution during the week, the market remained under pressure over the next three trading sessions, before rebounding on Friday to close the week up 5,073 points or 3.0%WoW at 176,094 points.

Sentiments were further supported by positive June 2026 financial results announced by major companies. Meanwhile, SBP’s status quo in its first FY27 meeting on Monday had little impact on the market, as the decision was largely in line with expectations. Additionally, market participation strengthened, with average daily trading rising by 48.5%WoW to 1.3 billion shares.

On the macroeconomic front, foreign exchange reserves held by SBP decreased to US$17.0 billion as of July 24, 2026. Saudi Arabia also rolled over its US$5 billion deposits for another 3 years, reducing external debt repayments to US$21.5 billion for FY27.

Other major news flow during the week included: 1) ECC approves package of export finance incentives, 2) Dar seeks US partnership to double bilateral trade to US$20 billion, 3) PM Shehbaz Sharif approves amendments to Pakistan Oil Refining Policy, 4) Saudi group eyes US$10 billion investment in Pakistan, and 5) Pakistan, Kuwait agree to expand economic ties.

Active sectors were: Jute, Modarabas, and Refinery, while the lagged included: Close-end Mutual Funds, Miscellaneous, and Textile Weaving.

Major buying was recorded by Mutual Funds of US$14.7 million. While sellers were Individuals with US$11.9 million.

Top performing scrips were: AICL, MLCF, PIBTL, KOHC, and IBFL, while laggards included: HGFA, PIOC, PGLC, YOUW, and TPLRF1.

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

Favorable financial results for the quarter 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.

Formation of Multinational Maritime Defense Alliance

The founding members of the Multinational Maritime Defense Alliance on Thursday approvedthe establishment of the coalition as a framework for maritime defense cooperation, with Saudi Arabia designated as its founding nation, leader and permanent headquarters.

In a joint statement, the founding states said growing threats to global maritime security require stronger collective cooperation to protect freedom of navigation, international trade routes and global energy supply lines through the Bab al-Mandab Strait, the Red Sea and the Gulf of Aden.

The alliance said it will operate in accordance with international law, United Nations conventions and internationally recognized norms to enhance maritime security, safeguard international shipping and protect shared maritime interests.

The participating countries agreed to establish the alliance's Joint Command, command-and-control centers, Joint Maritime Operations Center and General Secretariat in Saudi Arabia as its principal executive bodies.

The statement reaffirmed the founding members' commitment to the purposes and principles of the UN Charter, international law and globally recognized treaties and norms, describing maritime security as a shared responsibility that requires close coordination to address common and transnational threats.

The participating countries said they will continue completing their domestic legal and constitutional procedures to formally accede to the alliance's charter.

Under the agreement, members will expand cooperation in maritime security, intelligence and information sharing, operational planning, joint exercises, training, capacity building, lessons learned and joint maritime operations in accordance with the alliance's charter.

The statement stressed that the alliance is purely defensive in nature and is not directed against any country, alliance or international organization. It said all activities will be conducted in full compliance with international law, respect for state sovereignty and the protection of freedom of navigation, while participation in alliance activities and operations will remain a sovereign decision for each member state.

The founding members also invited other countries that share the alliance's objectives and principles to join the charter, saying broader participation would strengthen collective maritime security in the Bab al-Mandab Strait, the Red Sea and the Gulf of Aden.

The statement described the alliance as a strategic step toward enhancing maritime security, deepening defense cooperation among its members and supporting regional and global stability, while complementing international efforts to preserve international peace and security.

Earlier on Thursday, Saudi Arabia, Kuwait, Bahrain, Qatar, Pakistan, Türkiye, Egypt, Jordan, Yemen, Bangladesh, Nigeria, Sudan, Djibouti and Somalia endorsed the alliance and welcomed agreement on its founding arrangements, while additional countries expressed support and are completing their national procedures before joining the initiative.

Widening War in the Middle East Could Be a Fatal Mistake for the United States

Five months after the United States and Israel launched military operations against Iran, the conflict has outgrown its original battlefield. What began on February 28 has expanded from Iran and Israel to Iraq, Jordan, Egypt and the Strait of Hormuz, raising the risk of a wider regional war with serious global consequences.

The latest escalation underscores this danger. US and Saudi forces jointly struck Iran-aligned groups in eastern Iraq, marking Riyadh's first publicly acknowledged military operation alongside Washington. Iran retaliated by firing missiles at a US base in Jordan and targeting ships in the Strait of Hormuz, the world's most important energy corridor.

Saudi Arabia's subsequent diplomacy is equally telling. After the joint strikes, Defence Minister Prince Khalid bin Salman met US Vice President JD Vance in Washington and reportedly urged the Trump administration not to expand the conflict by attacking Yemen's Houthis or launching further strikes against Iran-backed militias in Iraq. When even America's closest regional ally urges restraint, Washington should take notice.

The conflict is already spreading. A drone strike on a US-owned gas storage tanker at Egypt's Mediterranean port of Damietta highlighted the vulnerability of regional energy infrastructure. Meanwhile, repeated Iranian missile and drone attacks expose the growing limits of American deterrence. According to the Center for Strategic and International Studies, the United States has fewer than 1,000 Patriot and fewer than 250 THAAD interceptor missiles, raising concerns about sustaining a prolonged regional conflict.

The economic risks are equally serious. Any disruption in the Strait of Hormuz threatens global oil and LNG supplies, pushing up freight costs, insurance premiums and energy prices, with inflationary consequences far beyond the Middle East.

President Donald Trump now faces a crucial choice. He can widen the conflict in pursuit of short-term military gains, or recognize that every new front increases the likelihood of a broader and costlier war.

History shows that great powers often falter not because they lack military strength, but because they underestimate the costs of prolonged conflicts. The widening war in the Middle East could become a fatal strategic mistake for the United States. Statesmanship will be measured not by the number of battles fought, but by the wisdom to prevent a wider regional war.

Strait of Hormuz: A Case for Regional Stewardship

The Strait of Hormuz is the world's most critical energy corridor, carrying nearly one-fifth of global oil and liquefied natural gas supplies. Any disruption in this narrow waterway sends shockwaves through energy markets, raises shipping and insurance costs, and threatens global economic stability. A disappointing fact is that due to decades of external military involvement, the Strait has remained vulnerable to recurring crises.

Recent diplomatic developments offer an opportunity to rethink its security architecture. Iranian Foreign Minister Abbas Araghchi has called for closer regional cooperation, while Oman has proposed establishing a joint maritime mechanism involving Iran and the Gulf states. Inspired by the Strait of Malacca, the proposal envisages voluntary contributions from users of the waterway to finance navigation safety, environmental protection, search-and-rescue operations, and maritime coordination.

The Malacca model demonstrates that strategic waterways can be managed effectively through cooperation among the littoral states. A similar arrangement in the Gulf could bring together Iran, Oman, Saudi Arabia, the United Arab Emirates, Qatar, Bahrain, Kuwait, and Iraq in a permanent institutional framework dedicated to ensuring safe and uninterrupted navigation.

Such a mechanism would coordinate vessel traffic, strengthen maritime safety, improve emergency response, protect the marine environment, and establish communication channels to prevent misunderstandings from escalating into conflict. More importantly, it would place responsibility in the hands of those with the greatest stake in preserving regional stability.

The economic case is equally compelling. Every Gulf state depends on secure sea lanes for energy exports, trade, and investment. A stable Strait would reduce insurance premiums, lower transportation costs, strengthen investor confidence, and enhance global energy security.

Regional stewardship should not be viewed as excluding the international community. Freedom of navigation is a shared global interest, and countries benefiting from the Strait can continue supporting its operations through voluntary financial contributions, as they do in the Strait of Malacca. Operational responsibility should rest with the littoral states.

The Strait of Hormuz should become a symbol of cooperation rather than confrontation. By establishing a credible regional maritime framework, Gulf nations can safeguard one of the world's most vital trade routes while demonstrating that regional challenges are best addressed through regional leadership, shared responsibility, and sustained diplomatic engagement.

Pakistan's Western Borders Need More Than Military Vigilance

The recent wave of terrorist attacks in Khyber Pakhtunkhwa and Baluchistan is a sobering reminder that Pakistan's western frontier remains one of the country's most complex and persistent security challenges. Every attack claims precious lives, weakens investors’ confidence, disrupts trade, and raises fresh concerns about regional stability. Yet the real question is not merely who carried out these attacks, but why they continue despite years of counterterrorism operations.

Pakistan shares long and difficult borders with Afghanistan and Iran. Rugged terrain, cross-border tribal linkages, and extensive movement of people and goods make these frontiers among the hardest to secure. Border security is not solely a military responsibility; it also demands effective diplomacy, sound governance, and close regional cooperation.

Pakistani authorities have repeatedly expressed concerns that militant groups exploit territory across the western border to launch attacks inside Pakistan. However, an important distinction must be made. The existence of terrorist sanctuaries does not automatically imply state sponsorship. In many border regions, weak administrative control, porous frontiers, criminal networks, and ungoverned spaces can provide militants with opportunities to operate without necessarily reflecting official government policy. Recognizing this distinction is essential for objective analysis and effective policymaking.

At the same time, neighboring countries also bear an important responsibility. Under international law, every state is expected to ensure that its territory is not used for hostile activities against another country. Effective intelligence sharing, coordinated border management, and timely action against militant networks are therefore indispensable for regional peace and stability.

Another dimension deserves equal attention. Pakistan provides the shortest and most economical land route connecting Afghanistan to the Arabian Sea and has the potential to become a vital gateway for regional trade extending into Central Asia and beyond. Persistent instability along these corridors discourages investment, disrupts commerce, and undermines regional connectivity. It is therefore reasonable to ask who ultimately benefits from keeping Pakistan's western border unstable.

Pakistan's response extends beyond kinetic operations. Military action can eliminate terrorists, but lasting peace requires stronger border management, improved governance in border districts, sustained economic development, effective intelligence, and constructive engagement with both Kabul and Tehran. Pakistan's long-term success will depend not only on eliminating terrorists but also on dismantling the political, financial, logistical, and ideological ecosystem that allows them to recruit, regroup, and strike again.

Time for Riyadh to Reassess Its Security Doctrine

For decades, Arab states have been persuaded that Iran poses the greatest threat to their security. Yet the region is arguably less secure today than at any time in recent history. This paradox deserves serious reflection, particularly in Riyadh.

The "Iran threat" narrative has shaped the Middle East's security architecture for more than four decades. Whether entirely justified or deliberately amplified, it has undeniably served several strategic objectives. It reinforced Arab-Iranian hostility, justified a sustained American military presence across the Gulf Cooperation Council (GCC), generated hundreds of billions of dollars in arms sales, and strengthened Washington's political leverage in the region. It also created an environment that facilitated the Abraham Accords, while discussions on US support for Saudi Arabia's civilian nuclear program have, at various stages, been linked to broader regional political considerations, including normalization with Israel.

Despite these arrangements, the Gulf today faces growing uncertainty. The Gaza war, the prolonged confrontation involving Iran and Israel, recurring tensions in the Strait of Hormuz, and instability around the Red Sea have exposed the vulnerability of the region's energy infrastructure and maritime trade routes. Some regional observers argue that these developments risk undermining the Gulf's position as the world's most dependable energy supplier, regardless of who initiates each crisis.

These realities call for a strategic reassessment. Security partnerships should ultimately be judged not by their longevity, but by their ability to deliver peace, stability and economic security.

The China-brokered rapprochement between Saudi Arabia and Iran demonstrated that diplomacy remains a credible alternative to perpetual confrontation. While the agreement did not eliminate longstanding differences, it showed that dialogue can reduce tensions more effectively than escalating military rivalry. Rather than relying exclusively on traditional security partners, Riyadh could broaden its strategic options by deepening cooperation with Beijing, including in the peaceful development of civilian nuclear technology. Given China's substantial economic interests in Gulf stability and its constructive relations with both Saudi Arabia and Iran, Beijing is well placed to facilitate confidence-building measures and encourage regional de-escalation.

Equally important, GCC states should gradually reduce excessive dependence on external military protection and work toward a regional security framework based on dialogue, mutual respect and shared responsibility. Foreign military partnerships may continue to play an important role, but they should complement—not define—the region's long-term security strategy.

History suggests that lasting peace cannot be achieved through military superiority alone. Sustainable security is built on diplomacy, balanced partnerships and regional ownership of regional challenges. For Saudi Arabia, the question is no longer whether its traditional security doctrine has served the Kingdom well. The more important question is whether that doctrine remains the best guarantee of peace and prosperity in an increasingly multipolar Middle East.

PSX benchmark index declines 2.7%WoW

Pakistan Stock Exchange (PSX) remained under pressure during the week ended on July 24, 2026. The benchmark index declined by 4,782 points or 2.7%WoW to close at 171,021 points. The average daily trading volume also declined by 3.2%WoW to slightly more than 881 million shares.  

As reported my Western media, Yemen's Houthis declared a naval blockade on Saudi Arabia and claimed strikes on two Saudi oil tankers in the Red Sea, putting Bab el-Mandeb flows at risk alongside the existing disruption at the Strait of Hormuz. The US carried out strikes on Iranian military targets on twelfth consecutive night.

Brent peaked above US$101/ bbl before easing to US$97, keeping energy import and inflation concerns at the forefront.

Sentiment found some support from S&P Global upgrade of Pakistan's long-term sovereign credit rating to 'B' with a stable outlook, citing stability and reform implementation.

On the macroeconomic front, yields during the T-Bills auction rose across all tenors.

Banking sector deposits increased 15.2%YoY to PKR40.9 trillion in June 2026.

Urea offtakes rose 2%YoY to 592,000 tons, driven by improving farm economics and availability of subsidies and cheaper financing. As against this, DAP sales declined 58%YoY on higher pricing.

Other major news flow during the week included: 1) Pakistan sought a US$10 billion bilateral exchange stabilization facility from the United States, 2) GoP proposed changes to the Brown field Refining Policy, 3) Pakistan purchased a spot LNG cargo at US$21.88/ mmbtu, the highest since March this year, 4) US unveiled new tariffs on 60 trade partners ranging 10-12% including Pakistan, and 5) OGRA decided to set petroleum prices on daily basis under new pricing mechanism.

Top performing sectors were: Refinery, Insurance, and Textile Spinning, while the lagged included: Jute, Sugar & Allied Industries, and Close-end Mutual Fund.

Major selling was recorded by Mutual Funds and Banks of US$31.0 million, while major buyers were Individuals and Foreigners aggregating to US2$2.5 million.

Company-wise, top performers were: YOUW, CNERYGY, PGLC, ATRL, and NESTLE, while laggards included: SSGC, SNGP, KTML, MLCF, and KOHC.

According to AKD Securities, the US-Iran conflict and international oil prices, along with monetary policy announcement would remain the key focus.

Additionally, favorable financial results for the period ended June 30, 2026 would drive the market sentiments 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.

US-Saudi Nuclear Deal Built on Contradictions

The proposed US-Saudi nuclear deal is being portrayed as a landmark initiative capable of reshaping the Middle East. In reality, it appears to be a proposal burdened with so many political and strategic conditions that its chances of implementation remain slim. It promises much, yet delivers little that Saudi Arabia has sought for years.

The first obstacle is Washington itself. Any agreement of this magnitude must pass the US Senate, where Middle East policy has historically been heavily influenced by pro-Israel interests. It is difficult to envisage congressional approval for any arrangement that Israel believes could narrow its long-standing strategic and technological superiority in the region. Political resistance in Washington, therefore, remains the biggest hurdle.

Even if the agreement survives Congress, its strategic value for Riyadh is questionable. Saudi Arabia has consistently maintained that any civilian nuclear program must eventually include the right to enrich uranium. If enrichment is prohibited, the Kingdom would remain dependent on foreign suppliers for nuclear fuel. Such an arrangement falls well short of the strategic autonomy Riyadh has long pursued.

The proposal becomes even more complicated if it is linked to Saudi recognition of Israel through the Abraham Accords. The Kingdom faces strong domestic, Arab and wider Islamic pressure not to normalize relations with Israel in the absence of a credible and irreversible path toward Palestinian statehood. Without meaningful progress on that front, normalization carries significant political costs for Riyadh.

There is also an economic dimension. Saudi Arabia has invested heavily in the United States over several decades, yet many in Riyadh question whether Washington has fulfilled the security commitments expected from a strategic ally. The muted American response to attacks on Gulf energy infrastructure and its shifting regional priorities have inevitably weakened Saudi confidence in US security guarantees.

Above all, Saudi leaders understand that American policy in the Middle East is inseparable from its commitment to Israel. Whether justified or not, a growing perception across the Arab world is that Israeli security considerations increasingly shape Washington's regional decisions. That perception inevitably influences Saudi strategic calculations.

For these reasons, the proposed US-Saudi nuclear deal looks less like a transformative agreement and more like a diplomatic bargaining chip. It expects Saudi Arabia to make strategic, political and financial concessions while offering neither an independent nuclear capability nor security assurances that Riyadh considers fully credible. Until these fundamental contradictions are addressed, the deal is unlikely to move beyond diplomatic headlines.

Washington Is Not Changing Course - It Is Buying Time

US Secretary of State Marco Rubio's recent statement that Washington remains willing to negotiate with Iran and that "the possibility for diplomacy remains alive" has raised more questions than answers. After nearly two weeks of sustained military operations, the renewed emphasis on diplomacy appears less like a change of policy and more like an attempt to buy time.

Since the ceasefire memorandum signed in April, President Donald Trump's objectives have appeared to shift repeatedly. At different stages, Washington has spoken of containing Iran's nuclear program, weakening its regional influence, pressuring its leadership and demanding broader concessions. These shifting objectives have reinforced the perception that the ultimate goal is Iran's unconditional surrender—an ambition that has proved far more difficult than many in Washington may have anticipated.

Ironically, the prolonged confrontation appears to have strengthened the very adversary it sought to weaken. Rather than triggering internal divisions or regime change, sustained external pressure seems to have fostered greater national unity inside Iran. Many regional analysts now argue that the conflict has elevated Tehran's strategic importance instead of diminishing it, making Iran an even more influential regional actor.

Military history shows that major powers often pause not because they have secured victory, but because they need time to reassess. Reports suggesting heavy expenditure of advanced munitions, the failure to achieve the anticipated regime change, and growing debate among some Gulf Arab states over long-term reliance on US security guarantees all point to an increasingly complex strategic landscape. Against this backdrop, a diplomatic initiative may offer Washington an opportunity to regroup, replenish resources, reassess its options and preserve strategic flexibility without appearing to retreat.

The battle is also being fought in the information domain. Narratives portraying the Houthis as targeting Saudi oil tankers have been questioned by many regional observers, who argue that their operations have primarily focused on vessels linked to Israel. Regardless of which narrative ultimately proves more accurate, the contest to shape international opinion has become almost as important as developments on the battlefield itself.

Whether Washington's latest diplomatic outreach leads to meaningful negotiations or merely marks a tactical pause remains to be seen. What is becoming increasingly evident that military superiority alone has not delivered the political outcome the United States and Israel sought. If diplomacy has returned to center stage, it may not be because Washington has changed course—it may simply be because, in modern conflict, time itself is a strategic weapon.

The Shifting Battle: From Oil to Shipping Corridors

For much of the twentieth century, oil was regarded as the world's most powerful geopolitical weapon. In the twenty-first century, however, control over global shipping corridors may prove equally—if not more—consequential. Whoever can influence the world's maritime chokepoints can shape not only energy supplies but also international trade, supply chains, and economic stability. Against this backdrop, the Red Sea appears to be emerging as the next major strategic battleground.

Following months of disruption around the Strait of Hormuz, growing concerns are now centered on the security of commercial shipping through the Red Sea. Together, the Strait of Hormuz, the Bab el-Mandeb Strait, and the Suez Canal constitute one of the world's most vital maritime corridors, carrying a substantial share of global trade, including oil, liquefied natural gas, manufactured goods, agricultural commodities, and containerized cargo. Any prolonged disruption would ripple across continents through higher freight costs, supply-chain bottlenecks, inflationary pressures, and increased energy prices.

The immediate question is not simply who is attacking commercial vessels, but who stands to gain from sustained instability in these strategic waterways.

Western governments and much of the international media have attributed recent attacks to Yemen's Houthi movement, arguing that the group continues to target maritime traffic as part of its confrontation with Israel and its Western allies. Given the Houthis' own public statements and previous operations, this explanation cannot be dismissed.

Yet geopolitics is rarely straightforward.

Military confrontations are increasingly accompanied by information warfare, where competing narratives emerge almost as rapidly as military events themselves. Some analysts caution against assigning responsibility before credible, independent investigations establish the facts. Premature conclusions can become powerful geopolitical tools, shaping public opinion and diplomatic responses long before evidence is fully examined.

Another line of analysis raises a different possibility. It suggests that if vessels linked to Saudi Arabia increasingly become targets, the objective may extend beyond disrupting commercial shipping. Such incidents could undermine the fragile rapprochement between Riyadh and Tehran, reviving regional rivalries that had begun to ease after years of confrontation. Those who favour a polarized Middle East would clearly benefit from renewed distrust between the region's two most influential powers.

There is also the Israeli dimension. Since the outbreak of the Gaza conflict, the Houthis have repeatedly declared that their maritime campaign is intended to pressure Israel by disrupting shipping linked to Israeli interests. If commercial traffic through the Red Sea becomes increasingly constrained, Israel's trade routes could face significant economic and logistical challenges. However, if the pattern of attacks shifts from Israeli-linked shipping toward Saudi-linked vessels, analysts will inevitably ask whether the conflict is being redirected by actors pursuing broader geopolitical objectives.

History suggests that great powers compete not only for natural resources but also for the routes that transport them. The struggle is no longer confined to controlling oil fields. Increasingly, the ability to influence strategic maritime corridors has become a source of geopolitical leverage. Disrupting a major shipping route can impose economic costs on multiple countries simultaneously without direct military confrontation.

Whether the current tensions represent an extension of the Israel-Houthi conflict, an attempt to derail Saudi-Iranian reconciliation, or a broader contest for influence over global shipping corridors remains an open question. What appears increasingly clear is that in today's interconnected world, strategic power lies not only beneath the ground in oil reserves but also on the sea lanes that connect continents.

The nation—or coalition—that can influence these maritime arteries possesses a powerful instrument of geopolitical leverage. In the twenty-first century, control of shipping corridors may prove even more valuable than control of the cargo itself.

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.

Why Are We Scared of Telling the Truth?

The first casualty of war is often the truth. Yet an equally disturbing reality is that many of us become unwilling participants in this process. We repeat official narratives, avoid uncomfortable questions, and hesitate to challenge the assumptions promoted by powerful states. Whether out of fear, political convenience, or media influence, we often stop asking whether there is another side to the story.

The present conflict involving the United States, Israel, and Iran offers a striking example. Much of the international discourse has focused on Iran's actions, while comparatively less attention has been given to the timing of the US-Israel military campaign, which began while diplomatic engagement over Iran's nuclear program was still underway. For many observers, this raises legitimate questions about the sincerity of negotiations and the priority given to diplomacy.

Another issue that receives limited discussion is the strategic importance of Iran in the regional balance of power. Many analysts argue that Washington and Tel Aviv view Iran as the principal obstacle to establishing a security order aligned with their interests in the Middle East. Whether one agrees with this assessment or not, it deserves open debate rather than dismissal.

Similarly, public discussion often frames Iran as the principal source of instability in the region, while criticism of Israel's policies receives comparatively less prominence. Across much of the Muslim world, perceptions differ significantly from those commonly reflected in Western political discourse. Ignoring these perspectives does little to promote mutual understanding.

The same applies to the role of the United States. Its military presence across the Arabian Peninsula is generally explained as necessary for regional security. Critics, however, argue that this presence also serves broader strategic objectives, including controlling energy routes and preserving American influence over one of the world's most important oil-producing regions. These competing interpretations should be examined rather than silenced.

Likewise, incidents involving attacks on US military installations in Gulf countries are frequently portrayed as attacks on the host nations themselves. Others contend that these bases are part of a broader geopolitical confrontation between Washington and Tehran. The distinction is important because it shapes how audiences understand the conflict and assign responsibility.

Healthy democracies are built not on unquestioning acceptance of official narratives but on the courage to ask difficult questions. Truth is rarely served by silence, selective reporting, or fear of challenging powerful interests. If meaningful peace is ever to prevail in the Middle East, the international community must be willing to examine every narrative critically, apply consistent standards to all parties, and encourage honest debate rather than suppress uncomfortable questions. Only by overcoming our fear of speaking openly can we hope to move closer to a more balanced understanding of one of the world's most consequential conflicts.

Beyond Hormuz: Is Yemen the New Diversion?

The attempt by an Iranian aircraft to land in Houthi-controlled Yemen, and the swift response by Saudi-backed Yemeni forces to prevent it, should not be viewed as an isolated aviation incident. It may represent another chapter in the wider geopolitical contest unfolding across the Middle East. More importantly, it raises a strategic question: Is the focus on Yemen intended to shift international attention away from the Strait of Hormuz?

For decades, the Strait of Hormuz has remained the world's most critical maritime energy corridor. Roughly one-fifth of global oil and a significant share of liquefied natural gas exports pass through this narrow waterway. Any instability there has immediate consequences for energy prices, inflation, global trade and financial markets. It is also the one strategic chokepoint where Iran possesses considerable geographic leverage.

Against this backdrop, renewed attention to Yemen is unlikely to be accidental. By reigniting tensions around Sanaa, the Red Sea and Bab el-Mandeb, Washington and its regional partners can compel Iran to divide its strategic focus. Instead of concentrating on Hormuz, Tehran must also devote diplomatic, military and logistical resources to protecting its interests in Yemen.

For Saudi Arabia, preventing Iranian flights from landing in Houthi-held territory serves immediate security objectives. For the United States, the broader strategic benefit lies in expanding the theatre of competition. A conflict confined to Hormuz leaves Iran operating in its strongest geographic position. A conflict stretching from the Persian Gulf to the Red Sea forces Tehran to manage multiple fronts simultaneously, thereby diluting its leverage.

Whether this reflects a carefully coordinated strategy or the convergence of regional interests remains open to debate. Yet the cumulative effect is unmistakable: international attention shifts from Hormuz to Yemen, from energy security to aviation disputes, and from the Persian Gulf to the Red Sea.

The Middle East has long demonstrated that perception is as important as military capability. In modern geopolitics, shaping the narrative often shapes policy. The latest confrontation in Yemen may therefore be less about one aircraft than about redirecting the world's strategic gaze. While headlines focus on Sanaa, the Strait of Hormuz—the true center of the region's geopolitical gravity—risks fading into the background. That, in itself, may be the most significant development.

Shanghai overtakes London in shipping hub rankings

According to Seatrade Maritime News Shanghai has taken second place in the 2026 Xinhua Baltic International Shipping Centre Development Index (ISCDI), breaking London’s six-year streak as runner in the ranking of global shipping hubs.

Singapore earned the top spot, a position it has held for all 13 years of the report’s history. With London slipping the third place, Hong Kong and Dubai rounded out the index’s top five cities.

Ningbo-Zhoushan overtook Rotterdam to become the sixth-highest-ranked shipping centre, while New York and New Jersey jumped up two places to eighth, overtaking Athens and Hamburg. There were no new entrants to the top 20.

Analyzing Shanghai’s ascendancy in the rankings, the report noted the city stood in seventh place in 2014 and has risen steadily since. Shanghai is home to the world’s busiest container port, which recorded strong growth in 2025, including at the world’s largest automated container terminal.

The opening of Maersk’s flagship logistics centre in Shanghai’s Lin-gang Special Area further strengthened the clusters’ case, as did the launch of The North Bund International Legal Service Port, a new international ship inspection operations team from China Classification Society, and the arrival of representative offices for both the International Chamber of Shipping (ICS) and London P&I Club.

The Index judges shipping centres based on three main weighted criteria: port inputs account for 20% of the total, business services 50%, and general environment inputs — which covers government transparency, customs tariffs, logistics performance, and the extent of e-government and administration — making up the remaining 30% of the score.

The report said Singapore’s grip on the top spot showed no signs of loosening, as container volume growth at its port outpaced Shanghai’s to remain the world’s second-busiest container port. Singapore’s bunkering industry also broke records in 2025 to remain the world’s largest bunkering destination crown with sales of 56.77 million tons. The report noted an increase in LNG deliveries and the issuing of bunkering licenses for methanol and groundwork for future ammonia developments.

Tonnage under the Singapore Registry of Ships rose 27% on-year to 137.46m gt and some 35 companies opened or expanded operations in the city in 2025.

“Singapore’s challenge heading into the latter part of the decade is less about defending its position as a leading shipping hub but about continuing to distinguish itself from other leading maritime cities across Asia. On the evidence of 2025, it is doing exactly that,” said the report.

The only shipping centre to gain two places this year was New York & New Jersey, which the report noted as home of private equity, law firms, brokerage firms, financial institutions and the New York Stock Exchange. The port recorded its third-busiest year ever, and the Xinhua-Baltic analysis highlighted long-term plans at the port, including completion of a harbour deepening project and the signing of two lease extensions of more than 30 years each.

The port’s long-term ambition is clear, as The port’s Master Plan 2050 projects cargo volumes through the port complex could double or triple by the middle of the century.