When Rules Apply Only to Adversaries

The United States frequently speaks of a rules-based international order. Yet recent events involving Iran raise a fundamental question: are these truly universal rules, or merely rules that apply to America's adversaries?

The contradiction is becoming increasingly difficult to ignore. When Washington launches military strikes, the action is described as self-defense, deterrence, or a contribution to regional security. When Iran retaliates, the same commentators who justified the initial strike suddenly discover the dangers of escalation. Cause and effect disappear from the discussion. The response becomes the story, while the action that provoked it is conveniently forgotten.

The ceasefire narrative offers an even clearer example. If a ceasefire is violated, responsibility should logically rest with whoever broke it first. Instead, the international audience is often presented with a distorted version of events in which retaliation becomes the principal crime and the preceding action fades into the background. Such a narrative does not uphold peace; it merely protects one side from scrutiny.

An equally revealing contradiction surrounds American military bases in Arab countries. These installations are not humanitarian centers or cultural exchanges. They exist for one purpose: military power projection. They provide logistical support, intelligence capabilities, and operational platforms for military action throughout the region.

Yet a curious transformation occurs whenever these facilities come under threat. The military base suddenly ceases to be viewed as a military asset and is instead portrayed solely as the territory of a friendly Arab state. When attacks are launched from the base, it is considered a legitimate instrument of American strategy. When retaliation targets the same facility, it is presented as an attack on an innocent host nation.

Such arguments are not merely inconsistent; these expose the selective logic that increasingly defines international discourse.

The uncomfortable reality is that Washington's greatest challenge today is not Iran, Russia, or China. It is the widening gap between the principles it advocates and the policies it pursues. Power can compel compliance, but it cannot manufacture credibility. Every time one standard is applied to allies and another to adversaries, the claim of defending a rules-based order becomes less convincing.

The world is not questioning America's power. It is questioning whether the rules Washington promotes are genuinely universal or simply another instrument of that power.

PSX benchmark index up 6.7%MoM

According to a report by Taurus Securities, at the end of May 2026, the benchmark index of Pakistan Stock Exchange (PSX) closed at 173,963, up 10,969 points or 6.7%MoM. Net FIPI outflow was recorded at US$17.08 million. Average daily traded volume was slightly more than 705 million shares, down 23%MoM. The average traded value also declined by 11%MoM to PKR36.8 billion. Nevertheless, overall activity remained dull in terms of volume and value.

Overall, mixed sentiments were witnessed at the bourse during the month. The earlier half was dominated by bearish sentiment, cautious activity and profit-taking. However, some recovery was seen in the latter half. Sentiments also got a boost from multiple IPOs in May’26 like Wahdat Poultry and Sitara Petroleum.

Key triggers for the market during the month under review included: 1) Pakistan stepped up mediator role as US-Iran draw closer to a deal; while global energy prices remain volatile as supplies remain affected, 2) IMF Executive Board approved third EFF review and disbursement of US$1.3 billion. The IMF adds 11 new structural conditions for future, 3) Pakistan issued Panda Bonds at a competitive 2.5% coupon, 4) Pakistan committed to 2% Primary Surplus for the next fiscal year, 5) LNG supplies remained disrupted due to the Middle-East conflict, 6) April 2026 balance of payments came under pressure on a sequential basis, as oil import bill spiked due to the US-Israel war on Iran and remittances also declined, 7) Headline inflation in April 2026 was reported at 10.9% and May 2026 NCPI is expected to rise to 12.4%, 8) the GoP increased petroleum levy to bridge revenue short-fall, 9) Pakistan auctioned offshore exploration blocks after 20 year gap, and 10) Internal security situation became fragile with fresh terrorist attacks in KP and Baluchistan.

Ceasefire Diplomacy or Managed Conflict?

Every morning brings fresh reports suggesting that the United States and Iran are inching closer to a ceasefire understanding. Yet, by evening, contradictory statements emerge, once again clouding the picture with uncertainty and strategic ambiguity. The pattern has now become too repetitive to ignore. It increasingly appears that both Washington and Tehran are buying time rather than genuinely pursuing peace, while carefully concealing their actual strategic objectives.

The initial justification for the US-Israel military campaign against Iran centered on Tehran’s refusal to accept Washington’s conditions regarding its nuclear and missile programs. However, the conflict narrative now appears to be evolving. The focus increasingly seems linked to reshaping the political architecture of the Middle East through expansion of the Abraham Accords, effectively compelling key Muslim countries, including Saudi Arabia, toward formal recognition of Israel.

Simultaneously, the continued tension surrounding the Strait of Hormuz raises another critical question. Despite repeated calls for de-escalation, there appears to be little urgency in Washington to fully restore normal maritime stability in the region.

Such instability serves multiple strategic purposes for the United States. It constrains oil exports from Gulf producers, complicates China’s energy security calculations, and strengthens Washington’s leverage in global energy markets by enhancing demand for American oil and gas supplies.

The domestic political environment inside the United States also adds another dimension. Repeated but unsuccessful attempts to politically weaken or impeach Donald Trump suggest that influential power centers may still consider him indispensable in managing an increasingly volatile geopolitical environment. His aggressive foreign policy posture, particularly towards Iran and the broader Middle East, continues to align with powerful strategic interests within Washington.

Taken together, these developments indicate that the current crisis may not be moving toward immediate resolution. Instead, the world may be witnessing the management of a prolonged controlled confrontation designed to gradually exhaust Iran economically, diplomatically, and militarily until Tehran is pushed toward accepting terms that resemble unconditional surrender. Until then, ambiguity itself may remain the most effective weapon in this conflict.

Oman: Next Phase of Washington’s Strategy

After failing to secure a decisive strategic victory against Iran despite months of escalation and military pressure, Washington appears determined to restore its geopolitical credibility elsewhere in the Gulf. In this evolving power contest, Oman may increasingly find itself exposed to external pressure disguised as regional “security management.”

For decades, Oman has maintained a delicate diplomatic balance. Unlike many regional actors, Muscat preferred mediation over confrontation and dialogue over military adventurism. Yet geography has transformed the Sultanate into one of the most strategically valuable locations in the region.

The Port of Duqm and surrounding naval infrastructure are dangerously close to the Strait of Hormuz — the world’s most critical oil transit corridor. At the same time, the location places Oman within immediate strategic proximity of Iran’s Chabahar Port and Pakistan’s Gwadar Port, two emerging nodes in regional trade and connectivity. This triangle alone explains why global powers increasingly view Oman not merely as a Gulf state, but as a geopolitical gateway.

Washington’s expanding military footprint across the Gulf is often presented as a mechanism for maintaining stability and protecting maritime trade. However, history suggests that foreign military presence rarely remains temporary. Strategic access gradually evolves into political leverage, while security dependency slowly weakens national sovereignty.

Donald Trump’s confrontational posture toward Iran reflects more than ideological hostility. It also represents an attempt to demonstrate American dominance after Tehran resisted enormous economic sanctions, diplomatic isolation, and military intimidation. Direct confrontation with Iran carries enormous risks, but smaller Gulf states may appear easier arenas where Washington can project strength without triggering full-scale regional war.

This should concern every Arab emirate. The Gulf monarchies must recognize that fragmented security policies only increase dependence on outside powers. No state, regardless of wealth, can indefinitely preserve sovereignty while outsourcing its strategic defense architecture to foreign military forces.

Today the pressure may revolve around Oman and the Strait of Hormuz. Tomorrow the same logic could be applied elsewhere in the Gulf under another security pretext.

The lesson is becoming impossible to ignore - Arab states must either develop a collective regional security framework based on mutual defense and strategic independence, or continue watching external powers shape the future of the Gulf according to their own geopolitical interests.

Pushing Iran to Edge a Dangerous Gamble

The recent US strikes on Iran during Eid ul Adha have intensified a growing perception across the Muslim world that Washington is no longer merely seeking deterrence, but is steadily pushing Tehran toward a position where unconditional surrender becomes the only acceptable outcome. Rightly or wrongly, this perception is gaining traction because of the open and silent backing extended by several regional allies, particularly some Arab states that view Iran primarily through the lens of strategic rivalry.

However, history shows that when powerful nations attempt to corner adversaries without offering a credible political exit, the consequences often become unpredictable and dangerous. States under extreme pressure rarely capitulate quietly. More often, they resort to asymmetric retaliation before losing the capability to respond altogether.

Iran’s leadership is fully aware that its strategic infrastructure, military facilities, energy assets, and regional influence networks remain under increasing pressure. If Tehran reaches the conclusion that its long-term survival is at stake, it may decide that escalation carries fewer risks than submission. That is the point where the entire region could enter a far more dangerous phase.

The uncomfortable reality is that the United States, because of geography, may remain relatively insulated from direct retaliation. The immediate exposure instead lies with neighboring Gulf countries hosting American military bases, intelligence facilities, naval deployments, and logistical infrastructure. In any expanded confrontation, these locations could rapidly transform into frontline targets.

Such a development would not only threaten regional security but could also severely disrupt global energy markets, maritime trade routes, and already fragile economies across the Middle East. Investors, energy importers, and governments around the world would all pay the price for a conflict that may initially appear limited but could spiral beyond control.

This is reason the present trajectory demands urgent diplomatic intervention rather than continued escalation. Strategic pressure may weaken an adversary temporarily, but humiliation-driven conflict rarely produces lasting stability. The Middle East has already witnessed enough wars born from miscalculation, proxy rivalries, and excessive military confidence.

The world must recognize the danger before events move beyond diplomacy. Pushing Iran to the edge may not produce surrender; it may instead trigger a retaliatory spiral whose consequences no regional actor can fully contain.

Crucial week ahead for tanker market

Tanker owners were mulling their options as more contradictions came from the United States and Iranian peace negotiations updates over the weekend. 

On the one hand, President Trump declared on Saturday night that a deal with Iran had been ‘largely negotiated’ and the Strait of Hormuz would be included in a potential deal. On the other, Iran’s semi-official news agency, Tasnim, said on Sunday that under draft terms of the US-Iran negotiations, the Strait ‘will not return’ to pre-war status, but added more uncertainty by stating that ship traffic would return to previous levels.

Whatever happens in the next few days, the tanker market will take months to return to some semblance of normality. If there is a deal, London-based shipbroker, Gibson, expects some residual hesitancy in transiting the Strait, with only higher-risk owner ready to commit. The voyages are likely to follow tried and tested post-war routes close to the Iranian or Omani coastlines, the broker said, especially as uncertainty remains over the location of possible mines. 

Gibson said that of the 157 mainstream tankers of more than 25,000 dwt lying in the Gulf at the time of its report, 123 were laden and ‘will attempt to exit swiftly’. 

Meanwhile there are 150 ballasters above that deadweight promptly positioned in the Gulf of Oman and ready to be fixed for export cargoes in short order. Freight rates will be high and volatile, the broker predicted, until the risks and hazards are deemed to be low. 

Port congestion is likely, loading schedules will have to re-established, export infrastructure and port operations remain uncertain. But all parties in the supply chain will be keen to get cargoes moving again as quickly as possible. 

However, Gibson also points out that there are further challenges in the longer term. It could take months for tanker positioning to return to normal. 

Significantly more tankers are now positioned in the West largely because of record volumes of both crude and product exports out of the US Gulf. 

Ballasters are unlikely to react immediately and Western-located tankers are weeks away from the Gulf. Their owners will be unlikely to commit to a pricy ballast haul without a paying cargo to cover the eastbound leg, Gibson said. 

Overall, the shipbroker’s analysis is cautiously optimistic. But some on the ground in the Gulf are less so.

ADNOC CEO, Sultan Al Jaber, attending an Atlantic Council event last Wednesday, said: “Even if this conflict ends tomorrow, it will take at least four months to get back to 80 per cent of pre-conflict flows, and full flows will not return before the first or even second quarter of 2027”.

Analysts said that this was among the most pessimistic of views from top industry executives. However, it underscored the severity of what the International Energy Agency has called the largest-ever energy crisis because of the almost total closure of the Strait.

Courtesy: Seatrade Maritime New

 

Trump’s Mirage of Iranian Surrender

The recent US military strikes in southern Iran—executed precisely as Iranian diplomats converged on Doha for peace talks—expose a calculated strategy that goes far beyond traditional non-proliferation.

While Washington publicly frames its objectives around Iran’s nuclear stockpile and the reopening of the Strait of Hormuz, the true epicenter of American foreign policy has shifted.

Under the current US administration, the conflict is no longer just about disarming Tehran; it is about leveraging military pressure to enforce a fundamental geopolitical restructuring of the Middle East.

This strategy became clear when President Donald Trump explicitly linked an Iranian ceasefire to a "mandatory" expansion of the Abraham Accords. By demanding that heavyweight Muslim nations like Saudi Arabia, Pakistan, and Turkey immediately normalize ties with Israel, Washington is using the Gaza and Iran conflicts as diplomatic leverage. The underlying ambition is not a balanced regional equilibrium, but rather the creation of a US-backed, Israel-centric architecture that permanently sidelines Palestinian statehood and curtails sovereign dissent.

The "Great Deal" being offered to Tehran begins to resemble a demand for unconditional surrender. By weaponizing sanctions, frozen funds, and periodic airstrikes, the US is signaling that any relief for Iran is contingent on its capitulation to a new regional order.

However, attempting to fuse an Iran peace deal with a mandatory expansion of the Abraham Accords is a dangerous gamble. As regional analysts note, trading the fantasy of total Iranian capitulation for the illusion that a fragile ceasefire can anchor a brand-new Middle East order is highly unstable. Regional powers like Pakistan have already signaled that these issues cannot be artificially interlinked.

If Washington continues to condition maritime security and nuclear diplomacy on an ideological restructuring of the Muslim world, it will achieve neither peace nor stability. Instead of a "Great Deal," this heavy-handed approach risks collapsing ongoing diplomacy, leaving behind a more volatile, fractured, and deeply polarized Middle East.

Washington Must Admit Defeat in Iran

When the joint US-Israel military campaign against Iran commenced on February 28, the White House projected absolute, unyielding confidence. "Operation Epic Fury" was sold to the public as a swift, high-impact initiative designed to permanently dismantle Tehran’s regional influence and force absolute nuclear concessions. Today, nearly three months later, the comforting illusions have shattered. Washington may have dominated the initial tactical battles, but let us be entirely clear - the United States has fundamentally lost this war.

The primary miscalculation lies in a fatal, outdated belief that modern asymmetric warfare can be won purely through kinetic superiority. While waves of airstrikes successfully degraded conventional military infrastructure, they completely failed to account for Iran’s ultimate economic equalizer: its chokehold on the Strait of Hormuz. By throttling one-fifth of the world’s energy supplies, Tehran triggered devastating geoeconomic shocks that rapidly rippled across global markets—sending international oil prices soaring and destabilizing regional financial hubs like the Pakistan Stock Exchange (PSX).

Instead of isolating Iran, the conflict has backfired spectacularly on the domestic front. Skyrocketing gasoline prices and dipping approval ratings ahead of the crucial mid-term elections have severely compromised the Trump administration’s political leverage. Tehran, acutely aware of this vulnerability, recognizes that it does not need to achieve military parity; it merely needs to survive the onslaught to outlast the political timeline of its adversary.

Now, more than six weeks into an uneasy ceasefire, the sudden diplomatic push from Washington reveals an act of political desperation, not a pursuit of peace. The intensifying pressure to force Tehran into a ceasefire under Trump’s strict, maximalist conditions is a classic "ceasefire trap." It is a calculated, coercive maneuver designed to retroactively manufacture a paper victory out of a stalemated conflict on the ground.

As noted by regional analysts and highlighted in recent reporting by Reuters, a war designed to be a short-term romp has evolved into a long-term strategic failure. Forced capitulation on paper cannot mask the reality that Iran's core command structures, proxy networks, and buried uranium stockpiles remain entirely intact.

Rather than doubling down on a broken strategy or masking defeat with coercive diplomacy, it is time for the United States to mend its severe strategic mistake. Overwhelming military power is no longer enough to dictate the terms of global order, and continuing this entanglement will only deepen the damage to American credibility abroad.

PSX benchmark index up 1.4%WoW

Pakistan Stock Exchange (PSX) posted recovery throughout the week, after jitter on the first trading day. The benchmark Index gained 2,248 points or 1.4%WoW to close at 167,844 points on Friday, May 22, 2026. Market participation declined, with average daily trading volume plunging to 747 million shares.

The dominant sentiment driver remained the prevailing US-Iran conflict, where early-week drone strikes on UAE nuclear facilities and Saudi Arabia weakened investors’ confidence.

However, sentiment recovered from the second trading session onward after US Vice President Vance confirmed progress in diplomatic talks, with both Pakistan’s Interior Minister and Field Marshal Asim Munir traveling to Tehran to help finalize a draft agreement.

Foreign exchange reserves held by State Bank of Pakistan (SBP) surged to US$17.1 billion as of May 15, 2026 due to IMF disbursements under EFF and RSF programs.

Pakistan’s current account posted a deficit of US$324 million for April 2026, as compared to US$12 million for the same period last year, as higher energy import costs widened the trade gap.

IT exports increased by 33%YoY to US$423 million for April 2026.

Urea offtakes surged by 85%YoY to 463,000 tons in April 2026.

Other major news flow during the week included: 1) Pakistan secured a US$1.2 billion Saudi oil facility alongside a US$320 million AIIB loan for N-5 highway reconstruction, 2) Pakistan and IMF agreed on FY27 macro framework with GDP growth at 4.1%, CPI at 8.6% and primary surplus at 2% of GDP, 3) T-Bill yields rose across all tenors during this week’s auction, 4) Government approved sale of 51% to 100% stakes in IESCO, GEPCO and FESCO, and 5) Pakistan reopened offshore oil and gas exploration after an 18-year pause, signing 23 deep-water block agreements with immediate investment of US$82 million.

Top contributing sectors were Oil & Gas Marketing Companies, Leather & Tanneries, and Technology & Communication, while the laggards included                                                                                                                                                                                                                                                                                                                                                                                                                                                           Textile Spinning, Leasing Companies, and Tobacco.

Major selling was recorded by foreigners, amounting to US$14.2 million. Major buyers were Insurance and Individuals with US$13.4 million and US$3.7 million respectively.

Top performing scripts were: PTC, SCBPL, SRVI, PIOC, and UBL, while laggards included:  GADT, MEHT, CNERGY, AICL, and MTL.

According to AKD Securities, Iran-US negotiations, oil prices and FY27 budget finalization remain key near term catalysts. Prime Minister’s visit to China (May 23-26) and any ceasefire development serving as potential positive triggers.

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

 

Why US-Iran Ceasefire is a Dangerous Farce

The Islamabad talks are a masterclass in diplomatic theater, a performative exercise in negotiation that achieves nothing because Washington as well as Tehran desire peace on their terms. The temporary, Pakistan-mediated truce is not a stepping stone to a lasting ceasefire; it is a tactical breathing room used by two intransigent regimes to rearm, recalibrate, and prepare for the next, more violent escalation.

The primary catalyst for this endless delay is the delusion of total victory harbored by both sides. The Trump administration is treating these negotiations as a victory lap, operating under the flawed assumption that military strikes and severe economic pressure have brought Iran to the brink of collapse.

By demanding a "zero enrichment" standard, the total dismantling of Iran’s ballistic missile program, and the abandonment of its regional proxies, Washington is not offering a ceasefire. It is demanding unconditional capitulation from a sovereign state—a non-starter in the real world of geopolitics.

Tehran is equally detached from reality. While its domestic economy is in freefall and its infrastructure is heavily bruised, the Iranian regime remains obstinately defiant. By exploiting its geographic chokehold on the Strait of Hormuz—arbitrarily vetting ships and extorting "security fees"—Iran has weaponized global oil supply chains to hold Western economies hostage.

Tehran's insistence on immediate, permanent sanctions relief before making a single tangible concession on its nuclear program demonstrates a fundamental refusal to acknowledge its weakened position.

Compounding this gridlock is the duplicitous, bipolar messaging coming from both capitals. Washington arrogance—boasting that it is in "no hurry" while holding a gun to Iran's head—is met with Tehran’s stubborn pride, which views any compromise as a threat to regime survival.

The current truce is a diplomatic fiction. By demanding compromise on their maximalist demands, both the United States and Iran are guaranteeing that this pause in hostilities will inevitably fracture, dragging the region into an even deeper, catastrophic conflict.

Escalation Carries Costs World Cannot Afford

The debate surrounding the Strait of Hormuz increasingly appears to be moving in a dangerous direction. Attention seems focused on how quickly the waterway can be reopened and how strongly pressure can be applied. Yet a larger question deserves equal attention, what if the cure becomes costlier than the disease itself?

The Strait of Hormuz is not merely a strategic water passage. It is one of the world’s most critical economic arteries. Any prolonged disruption affects much more than regional politics. Energy markets react instantly, shipping costs rise, insurance premiums climb, and financial markets begin pricing uncertainty into almost every sector.

The present concern is not simply the blockade itself. The greater risk lies in the assumption that military escalation automatically delivers rapid political results. History often suggests otherwise. Military pressure can create consequences that continue long after the original objective has been achieved.

Another issue relates to perception and diplomacy. The impression that US President Donald Trump often adopts forceful positions and occasionally shifts messaging rapidly could create uncertainty among allies and adversaries alike. In international crises, predictability can become a strategic asset. Markets and partners generally respond more positively to clarity than to uncertainty.

Arab states also have reasons to remain cautious. Their economies have spent decades building themselves around trade, finance, logistics, and regional stability. Few would welcome being pulled into an expanding confrontation carrying uncertain outcomes.

Meanwhile, larger powers cannot be ignored. If Xi Jinping and Vladimir Putin conclude that their strategic or economic interests are being threatened, increased diplomatic or political involvement may further complicate the situation.

The real warning is becoming difficult to ignore. The issue may no longer be whether the Strait of Hormuz is reopened. The larger question is whether attempts to force a quick solution end up creating a much wider economic shock. History repeatedly shows that markets can recover from temporary disruptions. Recovering from a broader geopolitical fracture is often far more difficult.

Blockade, Brinkmanship and Arab Dilemma

The Strait of Hormuz crisis is no longer merely a military confrontation; it is becoming a strategic test of whether coercion can force Iran into submission, the answer appears negative. Efforts to end the blockade and restore normal maritime movement seem to have stalled because diplomacy remains overshadowed by Washington’s hardline approach toward Tehran. Yet history repeatedly shows that military pressure may weaken states, but rarely compels complete political surrender. More often, it deepens resistance and prolongs conflict.

Another troubling reality is the growing perception that negotiations are being used more to buy time than to build trust. If the United States is preparing harsher assaults under the cover of diplomacy, Iran would naturally be using the same period to regroup, rebuild capabilities, and recalibrate its response strategy. This creates a dangerous cycle in which diplomacy and escalation move together rather than separately.

Meanwhile, the economic costs for America’s Arab allies are becoming increasingly painful. Continued disruption in the Strait of Hormuz has severely affected regional oil exports, threatened revenues, investor confidence, and fiscal stability across Gulf economies that depend heavily on uninterrupted energy flows.

More alarming for Arab capitals is Iran’s demonstrated ability to strike strategic installations with precision. These attacks have shaken the long-standing assumption that Western military protection alone can guarantee regional security. The uncomfortable realization now emerging is that even advanced defense arrangements cannot fully shield critical infrastructure from a determined regional adversary.

This explains the visible cracks within the broader Arab strategy. Initial assumptions that Iran could be rapidly subdued or strategically isolated are giving way to a more cautious assessment. Tehran has proved far more resilient than many expected.

The Arab world now faces a difficult choice - continue supporting an escalating confrontation with uncertain outcomes or adopt a more pragmatic approach toward coexistence. This does not require endorsement of Iran’s regional policies. It simply demands recognition of geopolitical realities.

If the strategy of forcing Iran into submission has failed, Arab states may ultimately have to learn to live with the lesser evil — giving Tehran limited political space and rebuilding workable relations before the region slides into a wider and far more destructive conflict.

Game Spoilers in the Gulf Conflict

As the confrontation between the United States and Iran drags on without a decisive outcome, the risk of “game spoilers” entering the conflict appears to be increasing. In every prolonged geopolitical crisis, there are actors that benefit not from peace, but from deeper mistrust, wider confrontation, and permanent instability.

Recent attacks on the UAE and Saudi Arabia have once again intensified regional tensions. Predictably, fingers were pointed towards Iran. Yet the opaque nature of modern hybrid warfare makes definitive attribution increasingly difficult. Drone strikes, sabotage operations, and covert attacks are often designed to create confusion before facts fully emerge.

This raises an uncomfortable but important question: does Iran genuinely benefit from escalating hostilities with Gulf Arab states at this particular moment?

The answer is far from straightforward.

The UAE, particularly Dubai, depends heavily on regional stability to sustain its position as a financial, logistics, and commercial hub. Saudi Arabia’s Vision 2030 also requires calm energy markets and investor confidence. Iran, meanwhile, urgently needs uninterrupted oil exports — especially shipments destined for China — to stabilize its sanction-hit economy. A prolonged disruption in the Strait of Hormuz would damage Tehran as much as its Arab neighbors.

If all major regional players need stable oil flows, then who benefits from widening the Arab-Iranian divide?

This is where the possibility of “game spoilers” deserves attention. Any gradual rapprochement between Gulf capitals and Tehran could reduce regional polarization, weaken dependence on external security arrangements, and create new economic alignments across the Middle East. Such an outcome may not suit every strategic actor involved in the region.

History shows that Middle Eastern conflicts are rarely shaped solely by declared combatants. Proxy warfare, covert operations, intelligence manipulation, and narrative management have long remained part of the geopolitical landscape.

None of this proves the existence of a hidden hand behind recent attacks. However, dismissing the possibility entirely may also be naive. In today’s Middle East, perception itself has become a weapon.

The real danger may not only be missiles and drones, but the invisible forces attempting to ensure that Arabs and Iranians remain locked in perpetual suspicion and confrontation.

Dubai’s Dangerous Drift

For decades, Dubai built its prosperity on neutrality, commerce, and strategic pragmatism. It transformed itself into the Middle East’s leading financial and logistics hub by staying open to all sides. Today that carefully cultivated image appears increasingly at risk as the emirate seems to drift into a broader US-led confrontation with Iran.

Recent tensions with Saudi Arabia, speculation surrounding its future role in OPEC, and growing American pressure to assume a larger regional security role have created an uncomfortable perception that Dubai may be abandoning neutrality for geopolitical adventurism.

That could prove dangerously costly.

Dubai’s economic strength depends overwhelmingly on foreign investment, tourism, trade, and financial services. Unlike larger regional powers, it possesses limited industrial and manufacturing depth to absorb prolonged geopolitical shocks. The moment investors sense instability, capital flight can begin rapidly. Financial centers survive on confidence, not military alliances.

Geography further magnifies the risk. Iran lies directly across the Gulf. In any military escalation, ports, airports, financial districts, and energy infrastructure become exposed targets. Even limited retaliation could disrupt shipping lanes, damage investors’ sentiments, and undermine Dubai’s carefully built reputation as a safe commercial gateway.

Another uncomfortable reality is often overlooked. While Israel may welcome Gulf normalization politically, it also views regional influence competitively. Dubai’s emergence as a dominant commercial and logistics hub does not necessarily align with Israeli ambitions to become the region’s undisputed technological and economic powerhouse.

Critical assets such as Jebel Ali Port and Port of Fujairah are central not only to Gulf trade, but also to global supply chains. Dubai became successful by avoiding regional confrontations. Abandoning that balance may expose the emirate to consequences far beyond its calculations.

Dubai’s Departure from Strategic Neutrality

For decades, Dubai’s greatest strength was not oil, military power, or ideology. Its success rested on something far more valuable - strategic neutrality. Long before the Abraham Accords, Dubai had developed deep commercial relations with Iran. Iranian traders, investors, and businesses contributed significantly to Dubai’s emergence as the Gulf’s financial and trading hub. Geography, commerce, and pragmatism kept the relationship functional despite periodic political tensions. That balance now appears dangerously fragile.

The recent regional escalation involving Israel, backed firmly by the United States, has fundamentally altered Gulf dynamics. Once confrontation expanded beyond rhetoric, countries hosting American military infrastructure inevitably became exposed to Iranian retaliation. The message from Tehran was unmistakable - no state facilitating strategic pressure against Iran can expect complete immunity from the consequences.

Dubai today faces a strategic contradiction. On one hand, closer ties with Israel promise access to advanced technology, intelligence cooperation, and stronger alignment with Western security interests. On the other hand, this growing partnership risks eroding the very foundations of Dubai’s economic model.

Global investors do not merely seek modern infrastructure or luxury skylines; they seek predictability and stability. Dubai’s ports, aviation industry, tourism sector, and re-export businesses all depend upon the perception that the emirate remains insulated from regional conflict. Persistent hostility with Iran threatens that perception.

The Gulf cannot afford a prolonged environment where trade routes remain vulnerable, energy corridors uncertain, and geopolitical tensions permanently elevated. Iran, despite sanctions and diplomatic isolation, remains a pivotal regional actor with influence over critical maritime routes and strategic leverage that cannot simply be ignored.

The real danger for Dubai is not military confrontation alone. It is the gradual loss of its carefully cultivated identity as a neutral gateway between competing powers. History shows that commercial centers flourish when they build bridges, not when they become extensions of geopolitical rivalries.

Dubai’s growing closeness with Israel may deliver short-term strategic gains, but if it destroys regional economic equilibrium, the long-term costs could far outweigh the immediate benefits.

PSX benchmark index sheds 3.23%WoW

Pakistan Stock Exchange (PSX) witnessed bearish momentum during this past week, with the benchmark Index shedding 5,520 points or 3.23%WoW to close at 166,596 on Friday, May 15, 2026. The average daily trading volume declined 6.3%WoW to 1.1 billion shares.

The key sentiment driver remained the escalating US-Iran conflict, with Brent crude hovering around US$106/ bbl throughout the week, amid blockade of Strait of Hormuz.

Trump termed Iran’s response to the US proposal “unacceptable”, though sentiments improved slightly towards the week-end after US Vice President signaled progress in talks. Pakistan’s mediation efforts drew support from both the US and China.

Pakistan received a US$1.3 billion IMF disbursement under the EFF and RSF programs following completion of the third EFF review and announcement of new performance criteria.

On the macro front, fiscal deficit narrowed to lowest ever of 0.7% of GDP or PKR856 billion in 9MFY26 as compared to 2.6% in same period last year.

Primary surplus rose 18%YoY to PKR4.1 trillion or 3.2% of GDP and petroleum levy collections increased 45%YoY to PKR1.2 trillion during 9MFY26.

In April 2026, Auto sales doubled to 22,000 units, remittances rose 11.4%YoY to US$3.5 billion, taking 10MFY26 inflows to US$33.9 billion, up 8.5%YoY

Foreign exchange reserves held by State Bank of Pakistan (SBP) edged up to US$15.87 billion as of May 08, 2026.

Provisional GDP growth was reported at 3.7% against a target of 4.2%, with per capita income increased to record high of US$1,901, economy size at US$452.1 billion, and public debt at PKR80.5 trillion as of March 2026.

Other major news flow during the week included: 1) Pakistan successfully launched its inaugural US$250 million Panda Bond in China's onshore capital market with 5x oversubscribed at the lowest ever rate of 2.5%, 2) Government aims to keep PKR425 billion in upcoming budget for unforeseen events, 3) Pakistan diverted gas to fertilizer plants amid Hormuz-related supply disruptions, while Qatari LNG cargoes continued arriving through special transit arrangements, 4) Government remains committed to abolishing PKR140 billion gas cross-subsidy by Jane 2027 under IMF structural benchmark, and 5) Pakistan imported 6 million barrels of US crude oil through Cnergyico for the first time.

Top performing sectors were: Leasing Companies, Leather & Tanneries, and Sugar & Allied Industries, while laggards included: Textile Weaving, Textile Composite, and Synthetic & Rayon.

Major selling was recorded by Mutual Funds and Companies of US$8.90 million and US$5.07 million respectively. Major net buyers were Individuals and Brokers with US$14.20 million and US$1.07 million, respectively.

Top performing scrips were: GADT, TRG, PGLC, KEL, and SRVI, while laggards included: KTML, PIOC, AICL, UBL, and FHAM.

Going forward, Iran-US negotiations and international oil price remain the key drivers in the near term, with any easing in Strait of Hormuz tensions serving as a key supportive trigger.

The recent IMF disbursement of US$1.3 billion under EFF and RSF programs, alongside Pakistan's landmark Panda Bond debut, reinforces the improving external financing outlook. Market continues to trade at attractive valuations.

The top picks of AKD Securities include: OGDC, PPL, UBL, MEBL, HBL, FFC, ENGROH, PSO, LUCK, FCCL, INDU, ILP and SYS.

From Ultimatums to Outcomes: Reframing Iran Endgame

Donald Trump’s dismissal of Iran’s response as “totally unacceptable” signals a negotiating stance that leaves little room for outcomes. When diplomacy is reduced to demands for capitulation, escalation becomes less a risk and more an inevitability.

The challenge, however, is not just Washington’s posture. Iran, shaped by years of sanctions and strategic isolation, is equally unlikely to yield under pressure. This creates a familiar deadlock—where both sides talk past each other, and the costs are externalized to the region and the global economy.

A more credible pathway lies not in maximalist demands, but in sequenced reciprocity.

First, de-escalation must begin with restoring stability around the Strait of Hormuz. Ensuring uninterrupted maritime flow should be treated as a shared obligation, not a bargaining chip.

Second, sanctions relief should be structured, phased, and conditional—tied to verifiable commitments. This shifts the dynamic from coercion to compliance.

Third, both sides need to acknowledge that absolute victory is neither realistic nor necessary. Strategic restraint often delivers more durable outcomes than rhetorical dominance.

Finally, a framework for post-conflict stabilization—whether through indirect compensation, reconstruction channels, or multilateral engagement—can help rebuild minimal trust without forcing politically unviable concessions.

Diplomacy succeeds not when one side surrenders, but when both sides find a way to step back without losing face. Without that recalibration, the current trajectory risks becoming a prolonged and costly stalemate with no clear exit.

Selective Outrage or Strategic Compulsion?

The ongoing tensions involving Iran, United States, and Israel have once again exposed a troubling inconsistency in the Arab world’s diplomatic posture. While Gulf states react sharply to Iranian retaliation, their silence—or at best, muted response—towards US actions raises uncomfortable questions.

At first glance, this appears as selective outrage. But a deeper probe suggests something more structural. Key players like Saudi Arabia are navigating a narrow corridor shaped by security dependence, economic vulnerability, and regional rivalry. Hosting US military assets and relying on Washington’s security umbrella inevitably constrains their diplomatic choices. Public dissent is costly; alignment, even if reluctant, becomes pragmatic.

Yet, to argue that Arab foreign policy is entirely dictated by Washington would be misleading. The recent thaw between Riyadh and Tehran, alongside growing engagement with China and coordination with Russia on oil policy, indicates an evolving strategic autonomy. These states are no longer passive actors; they are recalibrating within limits.

The real driver, remains regime security and regional balance. For Gulf capitals, Iran is not merely a fellow Muslim state but a strategic competitor with influence across multiple fault lines. This perception shapes responses far more than ideological or religious solidarity, often sidelining platforms like the Organization of Islamic Cooperation into irrelevance.

The result is a policy framework that appears inconsistent but is, in fact, internally coherent. Arab states are neither fully aligned with Washington nor entirely independent of it—they are balancing. The question is not why this duality exists, but how long it can be sustained without eroding credibility in an increasingly polarized region.

PSX benchmark index up 5.0%WoW

Pakistan Stock Exchange (PSX) witnessed bullish momentum during the outgoing week, with the benchmark Index gaining 8,122 points or 5.0%WoW to close at 171,116 on Friday, May 08, 2026. Average daily trading volume decline by 9.7%WoW to 1.1 billion shares.

The dominant sentiment driver was easing of US-Iran tensions, with both sides reportedly edging towards a short-term memorandum to halt the conflict, leading international oil prices to ease by 18%WoW up to US$100.5/ barrel.

Earlier in the week, U.S. President Trump paused the 'Project Freedom' naval operation in the Strait of Hormuz after one day, following a request from Pakistan and other mediating countries, citing progress towards a final agreement with Tehran. Despite an intermittent exchange of fire between U. and Iranian forces near the Strait mid-week, Trump confirmed the ceasefire remained in effect. The IMF Executive Board meeting on Friday was scheduled to consider approval of the US$1.2 billion tranche under the EFF and RSF programs.

Pakistan’s foreign exchange reserves are expected to reach US$17 billion by end June 2026.

Pakistan's trade deficit increased by 4%YoY to US$4.1 billion in April 2026, taking 10MFY26 trade deficit to US$32.0 billion, up 20%YoY.

Cement dispatches rose 11%YoY to 3.9 million tons in April 2026, led by 20%YoY growth in local dispatches.

LSM index rose 11.1%YoY in March 2026, taking 9MFY26 growth to 6.5%YoY.

Foreign exchange reserves held by SBP increased to US$15.85 billion as of April 30.

Other major news flow during the week included: 1) Pakistan to issue US$250 million Panda bonds within 10 days, 2) GoP to end untargeted electricity subsidies, 3) Power consumers to get PKR1.75/ unit relief, 4) Government bars private OMCs from HSD imports, and 5) Pakistan rejects lowest spot LNG bids.

Top performing sectors were: Cement, Technology, and Inv. Companies, while laggards included: Textile Weaving, Leasing Companies, and Synthetic & Rayon.

Major selling was recorded by Insurance and Individuals of US$9.8 million and US$3.7 million respectively. Major buyers were Brokers and Mutual Funds with US$6.1 million and US$4.5 million respectively.

Top performing scrips of the week were: PIOC, JVDC, PIBTL, SSGC, and GADT, while laggards included: INDU, IBFL, MEHT, THALL, and ATRL.

According to AKD Securities, the IMF Executive Board's approval of US$1.2 billion tranche alongside the trajectory of US-Iran negotiations would remain near-term catalysts for market direction, with continued softening of oil prices to act as a supportive trigger.

Market continues to trade at attractive valuations. According to the brokerage house the benchmark Index is anticipated to reach 263,800 by end December 2026.

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

Decline of rules based maritime market

Assertive America doctrine forms part of a geopolitical mix ushering in an age of extremes for shipping to navigate.

Hellenic Chamber of Shipping board member Yannis Triphyllis initiated a debate between insurers that covered virtually all of the major challenges of the maritime market in the modern age.

In his welcome speech to the Marine Insurance Greece conference in Athens on May 06, Triphyllis claimed that, “Invasion of the Donbas was the starting gun for the unravelling of the rules-based market.”

Key to the discussion was a presentation by COO of the American Club, Daniel Tadros, who laid out the US vision of a new world order, which has the US at the center of the new global economic regime.

Tadros launched into his treatise with a quote from the second world war Admiral Yamamoto, of Japan, speaking after the attack on Pearl Harbour, “I fear that all we have done is to awaken a sleeping giant and fill him with a terrible resolve.”

“Now, fast forward to the last four or five years,” Tadros told the Maritime Insurance Greece audience, “The geopolitical competition with China, both commercially and as a matter of national security, has woken up the United States and has filled not just politicians, both Democrats and Republicans, but also the government, the military, everyone, with a resolve to rebuild the US Merchant Marine.”

Historically the US had been a world leader in shipping, owning 63% of the world’s tonnage, today that was down to less than 1%, the cutting of government subsidies, high labour costs all contributed to the rise of Japanese and South Korean prominence in shipbuilding.

In the last 15 years, China has surged ahead, not just in shipbuilding, which Tadros focused on, but in a number of key industries, including electric vehicles, green energy and through investments across the globe through the Belt and Road.

“The geopolitical competition and national security have created what many have called assertive US maritime trade policies,” said Tadros. The assertive policy can be seen in the tariff regime and other policies that are aimed at levelling US costs with their international competitors.

“In the Western Hemisphere, the United States is looking at combating China's influence, migration, combating cartels, expanding partnerships, and strengthening supply chains, including looking at the Venezuela region.”

The US is combating Chinese influence in Africa, Europe and the Middle East, and Washington is, “working furiously” to reach a peace deal in Ukraine, Tadros said.

According to the assertive America doctrine, a key issue is to avoid conflict between China and Taiwan, and to avoid conflict in the Middle East the US has taken action to remove its main destabilizing forces the Palestinians and the Iranians.

An effect of the assertive America policy was highlighted by George Karkas, MD of Gard Greece, “Developments in the Strait of Hormuz have been quite extraordinary. I actually heard from Mr. Rubio that 10 seafarers died,” in what Karkas said is “one of the most significant disruptions to global trade and energy markets in decades.”

The potential consequences of the disruptions could affect food supplies, energy, and the basic necessities of life for millions of people around the world. Since April, there have been some 20,000 seafarers stranded on between 2,000 and 3,000 ships imprisoned in the Arabian Gulf.

Shipping, as Karkas points out, is a major global success story, “Over time, we have built the framework of rules, standards, practices that work together and have made shipping safer, more efficient, and more accountable. Today, shipping is one of the most internationally governed industries in the world, and this matters. We see fewer lives lost at sea, fewer major casualties, and fewer pollution incidents than at any point in any modern history.”

This framework did not evolve through chance, it happened because it was “rooted” in the work of the United Nations and the IMO, he said. Now we are “entering an age of extremes,” according to Karkas, shifting from a bipolar to a multipolar world “marked by conflict, shifting alliances and fragmentation”.

Karkas showed that the maritime insurance industry has reduced the number of claims — shipping has become a safer industry overall — but that claims over a five-year average are now three times bigger, with the strongest increase in the last 10 years.

“So, we have fewer claims, but when things go wrong, they seem to go very wrong and become very costly. In short, we see far more extreme claims. Why is this happening? The reasons are probably many and complex, but part of the picture is no doubt politics and geopolitics,” said Karkas.

Karkas spoke about the criminalization of crew where nation states are more interested in extracting money than they are in justice for the accused. “If claims and verdicts, become more detached from reality and from the loss actually suffered, they end up undermining trust in the system," he said.

The system is under increasing pressure from risks, including climate change, extreme weather, the shadow fleet, which continues to be a systematic challenge for insurers, and not least the increase of more extreme claims.

Although not directly said by Karkas in his presentation, the global ramifications of the assertive America doctrine are a decay in a system of trust, which ultimately undermines the system as a whole.

Courtesy: Seatrade Maritime News