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

Emerging UAE Role in the US–Iran Equation

The proposition that the United States may be quietly positioning the United Arab Emirates (UAE), particularly Dubai—as a forward proxy against Iran is gaining traction, but it demands a measured and fact-driven reading rather than a dramatic conclusion.

The strategic backdrop has undeniably shifted since the Abraham Accords. These agreements did more than normalize UAE-Israel relations; these created a wider geopolitical architecture that strengthened US influence and recalibrated regional alignments vis-à-vis Iran. Analysts increasingly view this framework as part of a broader containment strategy, linking security, trade corridors, and intelligence cooperation.

At the same time, Iran’s perception of the UAE has hardened. The ongoing conflict in 2026 has seen direct strikes, diplomatic downgrades, and rising mistrust, effectively pushing bilateral relations into open hostility. This escalation reinforces the idea that the UAE is no longer a neutral economic intermediary, but an exposed frontline state—whether by choice or circumstance.

Geography amplifies this vulnerability. The narrow Persian Gulf places the UAE within immediate operational range of Iran. While this proximity could, in theory, offer logistical advantages for surveillance or rapid deployment, it simultaneously makes Emirati infrastructure an easy target. Recent attacks on shipping and critical assets in the region underline how quickly economic zones can turn into strategic pressure points.

However, the leap from “strategic partner” to “proxy battlefield” remains analytically weak. Dubai’s role as a global financial and logistics hub imposes hard constraints. Its economic model is built on stability, openness, and investor confidence—factors fundamentally incompatible with sustained military confrontation. Turning such a hub into a Launchpad for ground operations would impose costs far exceeding any tactical gain.

Equally important is the UAE’s own signaling. Despite deepening security ties with Washington, it has publicly resisted the use of its territory for offensive operations and has consistently called for de-escalation. This suggests a calibrated approach: align strategically, but avoid becoming the battlefield.

The more credible interpretation, therefore, lies in the evolving nature of modern conflict. The UAE is emerging not as a warfront, but as a strategic node—facilitating intelligence sharing, surveillance capabilities, and logistical depth within a US-led framework. In contemporary geopolitics, influence is often projected through networks rather than invasions.

In essence, the UAE’s role in the US–Iran equation is expanding, but within limits. It is a partner, a pressure point, and at times a target—but not, at least for now, a chosen battlefield.

Ground Realities Trump Must Not Ignore

The sooner President Donald Trump understands the realities of war, the better it will be for him.

What began on February 28, 2026, as an unannounced offensive by the United States and Israel against Iran was projected as swift and decisive. Weeks later, despite a fragile truce, the strategic picture tells a different story. The Strait of Hormuz remains effectively constrained, global oil markets are unsettled, and the core objectives of the campaign appear only partially fulfilled.

The most telling gap is between rhetoric and results. Early signals from Washington hinted at regime destabilization in Tehran. Yet Iran’s leadership has adapted rather than collapsed, with continuity preserved at the top. Its nuclear capability, though impacted, is not eliminated. More significantly, Tehran retains its most potent lever—its ability to disrupt global energy flows through the Strait of Hormuz, a chokepoint for roughly one-fifth of the world’s oil supply.

The economic consequences have been immediate and far-reaching. Oil prices have surged, pushing US fuel costs sharply higher and straining global markets. Ironically, some of the worst-affected players are Washington’s own Arab allies, whose economic stability is closely tied to uninterrupted energy flows. A conflict that unsettles allies while failing to decisively weaken the adversary raises uncomfortable strategic questions.

At home, the political costs are mounting. The war has already cost American taxpayers at least US$25 billion, while public opinion has turned increasingly skeptical. A clear majority of Americans now view the conflict as a mistake. Against this backdrop, Trump’s escalating attacks on the media—labeling coverage as “seditious” or hostile—appear less like defiance and more like frustration. When expectations are set high and outcomes fall short, the narrative inevitably shifts.

There is also a historical echo worth noting. During the Vietnam War, early confidence gradually gave way to a recognition of stalemate, amplified by increasingly critical media coverage. While the current conflict is different in scale and context, the emerging pattern—bold claims, limited gains, and rising domestic unease—carries a familiar undertone.

Wars are not won through declarations but through outcomes. Assertions of victory carry little weight when strategic objectives remain elusive and costs continue to rise. The longer this gap between expectation and reality persists, the greater the political and economic toll.

The conclusion is unavoidable: the sooner Donald Trump understands the realities of war, the better it will be for him.

The 700-Million-Barrel Oil Shock

Based on the projection from the Kepler Institute, by the final week of April 2026, the cumulative deficit in oil supply resulting from the closure of the Strait of Hormuz will hit 700 million barrels.

The closure of the Strait of Hormuz has presented the world with one of the most critical oil supply disruptions in modern history and has driven prices sharply upward. Unlike past shocks triggered by wars or embargoes, this blockage strikes at the very jugular of global energy logistics.

According to a fresh assessment by the Kepler Institute, an ongoing halt to oil tanker transit through the Strait of Hormuz until the end of April 2026 could push the global energy market into an extraordinary crisis, bringing the total oil supply deficit caused by this closure to approximately 700 million barrels. This drop in supply has triggered one of the largest oil shocks of the current era. By April 12, around 300 million barrels of oil had been removed from the supply chain due to the stoppage of traffic through this vital chokepoint — a corridor that carries roughly 20% of the world's daily oil demand.

In the wake of this disruption, Brent crude oil prices have surpassed US$100 per barrel, and the cost of refined products such as jet fuel has risen above US$200 per barrel — a scenario that has set off the phenomenon of demand destruction, leading airlines to cancel numerous flight routes, consumer countries to impose fuel rationing and mandatory remote work, and the International Energy Agency to revise downward its 2026 oil demand growth forecast.

Meanwhile, Saudi Arabia, by leveraging the full capacity of its East-West pipeline, and the United Arab Emirates, via the Fujairah export route, are attempting to offset part of the supply shortfall.

Conversely, Iraq has been largely incapacitated, with its exports collapsing from 4 million to less than 900,000 barrels per day. Without immediate diplomatic intervention, smaller Persian Gulf states may soon follow Iraq into paralysis.

Kepler cautions that even if the crisis is resolved immediately, the process of market recovery will not be swift, and the volume of lost oil could reach one billion barrels before the supply chain is fully restored. 

Two potential paths lie ahead for the market. In the favorable scenario, limited demand contraction and a gradual easing of the crisis over the next several weeks are anticipated. However, in the unfavorable scenario, continued disruption into the third quarter of the year could push oil prices toward US$190 per barrel and cause demand destruction on the order of several million barrels per day — an outcome that would be even more severe than the oil crisis of the 1970s. 

 

PSX benchmark index down 4.5%WoW

Pakistan Stock Exchange (PSX) remained in the grip of bears during the ended on April 30, 206. The benchmark index shed 7,677 points, down 4.5%WoW to close at 162,994 points, with average daily trading volume declining to 1.2 billion shares, down 30%WoW.

The most dominant factor contributing to this decline was the collapse of the Iran-US talks, where the US President cancelled a planned trip of his envoys to Pakistan. Consequently, oil prices remained elevated through the week, with the June’26 Brent contract hitting a high of US$126/ bbl.

Adding to this was decision by State Bank of Pakistan (SBP) to raise the policy rate by 100bps to 11.5% on Monday, the first rate hike in over two and half years.

The prolonged Middle East conflict was termed to be the primary driver for raising the policy rate, attributing inflation to remain above the target range in the next few quarters.

However, a positive development was the confirmation of the IMF Executive Board meeting scheduled for May 08, 2026 to consider approval of the US$1.2 billion tranche under the EFF and RSF programs.

Foreign exchange reserves held by SBP as of April 24, 2026 were reported at US$15.8 billion.

Other major news flow during the week included: 1) Pakistan clears US$3.45 billion loan to UAE, 2) Pakistan plans launch of Panda Bonds, 3) IMF okays 60% cut in gas levy, 4) No let-up in Pakistan’s efforts for US-Iran peace, and 5) Pakistan's weekly oil import bill rises to US$800 million amid US-Iran conflict.

Top performing sectors were: Textile Weaving, Tobacco, and Auto Assemblers, while laggards included: Vanaspati, Property, and Woolen.

Major selling was recorded by Mutual funds, and Brokers amounting to US$28.6 million and US$3.1 million respectively.

Major buyers were Individuals, and Companies with net buy of US$27.4 million and US$1.4 million respectively.

Top performing scrips were: HCAR, MEHT, INDU, PAKT, and MTL, while laggards included: YOUW, NBP, SSOM, GADT, and SSGC.

According to AKD Securities, a constructive resolution of US-Iran would remain the pivotal near-term catalyst for the market direction, with softening of oil prices to act as a trigger. 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.

Power Without Leverage

The rhetoric attributed to Donald Trump—of unilateral victory, a prolonged blockade of the Strait of Hormuz, and forcing Iran into submission—reads less like strategy and more like illusion dressed as resolve.

Start with the claim of “victory.” Wars are not won by declaration. If anything, the gap between stated objectives and actual outcomes after US-Israeli strikes on Iran underscores a harsher truth: overwhelming power no longer guarantees decisive results. The superpower looks less triumphant and more constrained.

The blockade argument is equally flawed. Closing the Strait of Hormuz for months is not a show of strength—it is an invitation to escalation. Iran retains the means to retaliate asymmetrically, while Gulf states would be unwilling passengers in a conflict that directly threatens their economic lifelines. What begins as pressure quickly mutates into regional instability.

Then comes the oil calculus. Squeezing Iranian exports may sound tactically appealing, but it is strategically self-defeating. The immediate consequence would be tighter supply, higher prices, and global economic stress. Washington’s Arab partners, far from benefiting, would absorb the shock. Punishing Iran ends up punishing the system.

Most unrealistic, however, is the expectation of Iran’s unconditional surrender. Tehran’s track record suggests the opposite: pressure entrenches resistance. Escalation does not compel compliance; it erodes space for negotiation.

The underlying problem is not intent but misreading leverage. Coercion without credible endgames risks exposing limits rather than enforcing outcomes. Each additional threat weakens, rather than strengthens, the credibility of US strategy.

A sustainable path demands restraint, not bravado—consolidating ceasefire arrangements, reopening diplomatic channels, and allowing all sides a face-saving exit. Power, when detached from realism, ceases to be power at all; it becomes noise with consequences.

The Shrinking Leverage of the United States

The visible frustration of Donald Trump over Iran’s negotiating posture is not merely diplomatic theatre—it is a signal of eroding leverage. What Washington presents as firmness increasingly looks like an inability to recalibrate.

The demand for unconditional concessions from Iran rests on a premise that no longer aligns with ground realities. Power, in this case, is not defined by military capability alone, but by the ability to translate pressure into outcomes. By that measure, the United States is struggling.

This conflict has exposed three uncomfortable truths. First, the United States chose to act without consolidating traditional alliances, thereby limiting both legitimacy and strategic depth. Second, its objectives remain ambiguous and unmet—maximum pressure has not yielded maximum compliance. Third, anticipated economic triggers, particularly in global energy markets, have failed to materialize in Washington’s favor.

More consequentially, Iran has demonstrated a capacity to absorb, adapt, and retaliate in calibrated ways. The costs, meanwhile, have spilled across the region - disrupted Gulf exports, strain on Qatar’s LNG infrastructure, and a dent in the UAE’s economic momentum. These are not peripheral effects—they redefine the strategic environment.

Having exited the Joint Comprehensive Plan of Action negotiated under Barack Obama, Washington now operates without the diplomatic continuity it once discarded. Escalation remains an option, but increasingly an expensive one with diminishing returns.

Here the real disagreement begins. The prevailing narrative still assumes that time favors the United States. Evidence suggests otherwise. Prolonged pressure, instead of breaking Iran, may be normalizing its resistance.

This is not a call for capitulation—it is a recognition of limits. The United States may still possess overwhelming power, but it no longer commands automatic outcomes. Accepting that reality is not weakness; refusing to do so may prove strategically costlier.

Who holds the cards?

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

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

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

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

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

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

Blockade as a Weapon

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

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

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

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

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

Recasting Failure in US–Iran Talks

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

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

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

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

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

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

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

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

PSX benchmark index down 1.9%WoW

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

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

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

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

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

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

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

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

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

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

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

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

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

 

What Next? Escalation not a solution

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

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

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

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

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

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

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

موجودہ جنگ ایران نہیں بلکہ عرب ملکوں کی معاشی تباہی کے لیۓ

 گزشتہ سال جون میں امریکہ اوراسرائیل نے جب ایران پر ایک ساتھ حملہ کیا تو ویسٹرن میڈیا نے تاثردیا کہ یہ حملے ایران کے ایٹمی اورمیزائیل پروگرامز کو نقصان پہنچانے کے لیۓ تھے۔

 اس سال فروری میں ان دونوں ملکوں نے دوبارہ اور زیادہ شدت سے ایران پرحملے کیۓ اور ایٹمی اورمیزائیل پروگرامز کو نقصان پہنچانے کے ساتھ رجیم چینج کا نعرہ بھی شامل کیا گیا۔

 میرے خیال میں یہ غلط بیانی تھی، اصل مقصد تیل پیدا کرنے والے عرب ممالک کی معیشت کو تباہ کرنا ہے۔ ممکن ہے آپ میں سے بہت سے پڑھنے والے میرے موقف سے اختلاف کریں، لیکن میری ان سے گزارش ہے کہ ان چند لائنوں کوپڑھیں اور ٹھنڈے دل سے غور کریں:

آبناۓ ھورمزکی بندش کے بعد یہ بات کی کسی حد تک تصدیق ہوگئی۔ یہ خبریں بھی آگئیں کہ اب تک عرب ممالک کا 500 ملین بیرل کروڈ آئل ایکسپورٹ نہیں ہو سکا۔

جنگ کے دوران یہ تاثر دیا گیا کہ ایرانی حملوں کی وجہ سے عرب ملکوں کی تیل اور دوسری اہم تنصیبات کو نقصان پہنچاہے۔ کچھ تجزیہ کاروں کا یہ خیال ہے کہ یہ تباہی اسرائیلی حملوں کی وجہ سے ہوئ ہے، ایرانی حملوں کی وجہ سے نہیں۔

اب تو یہاں تک کہا جارہا ہے کہ عرب ملکوں میں امریکی اڈے مقامی آبادی کو بطور ہیومن شیلڈ استعمال کررہے ہیں اور یہ اڈے عرب ممالک نہیں بلکہ اسرائیل کی حفاظت کےلیۓہیں۔

مسلمانوں کی لیۓ ضروری ہے کہ اپنے اصل دشمن کو پہچھانیں۔

PSX benchmark index up 4.0%WoW

Pakistan Stock Exchange (PSX) remained positive during this past week ended on Friday April 17, 2026, supported by easing geopolitical tensions and softer oil prices. The benchmark Index surged by 6,748 points or 4.0%WoW to close at 173,939. Average daily trading increased to 1,264 million shares, from 918 million shares during the earlier week, up 37.6%WoW.

One of the key boosters of investors’ sentiments was an inflow of US$2.0 billion from Saudi Arabia, with an aggregate committed support of US$8.0 billion, including a rollover of US$5.0 billion.

Sentiments improved following the Prime Minister’s announcement of reduction in prices of motor spirit and high speed diesel.

Confidence was further supported by Pakistan’s role in in ceasefire in a US-Iran war on optimism around a second round of talks to take place in Islamabad.

Fertilizer and Autos remained in focus. Urea offtake increased by 86%YoY to 569,000 tons in March 2026, while DAP, CAN, and NP sales also surged.

Auto sales rose to 19,100 units in March 2026, up 46%YoY, primarily driven by strong tractor sales.

Pakistan posted a current account surplus of US$1.07 billion in March 2026, marking the third consecutive surplus.

Another important feature was reduction in T-Bills yield.

UBL’s higher than expected earnings for the first quarter supported the momentum.

Leather & Tanneries, Textile Weaving, and Vanaspati & Allied Industries emerged as top performing sectors, while, Woollen and Tobacco were the laggards.

Major buying was recorded by Individuals and Companies with a net buy of US$10.7 million and US$10.5 million. Banks and Insurance companies emerged as major seller with a net sell of US$22.1 million and US$9.6 million respectively.

Top performing scrips of the week were: GAL, GHNI, LOTCHEM, BOP, and SRVI, while laggards included: PTC, FATIMA, ATRL, MEBL, and BNWM.

 According to AKD Securities, going forward, upcoming negotiations in Islamabad on US-Iran war would remain a key focus for investors. Any positive development would likely keep the market robust.

Despite the recent recovery, market continues to trade at attractive valuations.

According to the brokerage house the benchmark index is expected to reach 263,800.

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

Chinese Deployment in South China Sea

According to media reports, China has deployed vessels and installed floating barriers at the entrance to the South China Sea, where it is engaged in a maritime territorial dispute with the Philippines. This move comes as the United States, which is at war with Iran, has positioned three aircraft carriers in the Middle East and withdrawn military assets and personnel from the Indo-Pacific region. In the past, when US carriers left the area, Beijing often tested the level of external pressure against it through various channels.

According to reports vessels presumed to be Chinese Navy or Coast Guard patrol ships, fishing boats, and floating barriers crossing the reef were detected near the Scarborough Shoal lately. The Scarborough Shoal is one of the most fiercely contested maritime territories in the Indo-Pacific, where Chinese Coast Guard ships frequently ram and spray water cannons at Philippine maritime patrol vessels.

In 2023, China had installed floating barriers in the waters around the Scarborough Shoal to block Philippine fishing boats, leading to a conflict when Philippine Coast Guard divers were dispatched to remove them.

China claims sovereignty over most of the South China Sea under its self-defined "nine-dash line," but the Permanent Court of Arbitration (PCA) ruled in 2016 that this claim has no basis under international law. Despite this, Beijing has continued to dispatch patrol ships to the Philippines’ exclusive economic zone (EEZ), prolonging the dispute.

The US has pressured China since 2015 by conducting "Freedom of Navigation" operations in the South China Sea. Allies and partner nations advocating for a "Free and Open Indo-Pacific" (FOIP) have also participated in these exercises. However, a significant portion of US naval forces is currently deployed near Iran and the Strait of Hormuz.

The Washington Post has reported last month that the USS George H.W. Bush, which departed from the Norfolk base in Virginia, is expected to arrive in the Middle East around the April 21, 2026. This marks the third aircraft carrier to be deployed to the region, following the USS Abraham Lincoln, previously stationed in the South China Sea, and the USS Gerald R. Ford, which was deployed in the Caribbean Sea.

Additionally, part of the Terminal High Altitude Area Defense (THAAD) system, a key component in South Korea’s defense against North Korean nuclear and missile threats, has been withdrawn, and the 31st Marine Expeditionary Unit, typically the first to respond to contingencies on the Korean Peninsula, has been redeployed from Japan to the Middle East.

 

Washington’s Strategic Ambiguity

The ongoing confrontation between the United States and Iran has raised a fundamental question: what justifies a war that reportedly consumes over a billion dollars a day while its objectives remain unclear? From the outset, the rationale has been fluid. Concerns over Iran’s nuclear ambitions, the need to degrade its missile capabilities, and broader ambitions of strategic dominance were all cited. Yet, none evolved into a clearly defined end-state. As the conflict progressed, these shifting justifications exposed a deeper problem—not just of policy, but of purpose.

Wars, particularly those financed by taxpayers, demand clarity. They require defined goals, measurable outcomes, and a realistic timeline. In this case, none appear firmly in place. Instead, what has emerged resembles a pattern seen in past conflicts: initial confidence giving way to strategic drift. The absence of a publicly articulated exit strategy suggests that the war was not designed with an end, but rather escalated in response to unfolding events.

Equally troubling is the economic dimension. At a time when millions within the United States face challenges in healthcare, education, and infrastructure, the allocation of vast financial resources to an open-ended conflict raises serious ethical and economic concerns. Public funds—collected with the promise of improving citizens’ lives—are being redirected into a war whose tangible benefits remain difficult to quantify.

The disruption of global oil flows and the broader economic fallout have further complicated the equation. If the objective was stability, the outcome appears to be the opposite. If it was deterrence, the persistence of tensions suggests limited success. In purely economic terms, the cost-benefit balance appears heavily skewed toward cost.

This is not merely a question of foreign policy; it is a question of accountability. Democracies derive legitimacy from the consent of their citizens, and that consent is strained when public resources are committed without transparent justification.

A ceasefire may pause the fighting, but it does not answer the central question: what was achieved, and at what cost? Until that question is convincingly addressed, this war risks being remembered not for its outcomes, but for its ambiguity—and for the taxpayers who ultimately paid the price.

American LNG Exporters Biggest Winner

The ongoing US-Israel war on Iran is reshaping more than regional geopolitics—it is quietly redrawing global energy markets. At the center of this shift are US liquefied natural gas (LNG) exporters, emerging as the biggest beneficiaries of the crisis.

The Strait of Hormuz, a vital artery for global energy flows, remains under severe strain amid heightened tensions and a US naval blockade on Iranian ports. At the same time, Qatar—responsible for nearly a fifth of global LNG supply—has seen its export capacity hit by attacks. Repairs could take months, while full restoration may take years.

This twin disruption has created a global gas shortage. With Qatar largely sidelined, buyers in Asia and Europe are scrambling for alternatives. The United States, already the world’s largest LNG exporter, has stepped in to fill the gap.

American LNG producers are capitalizing on a rare pricing advantage. Natural gas sourced domestically at around US$3/ MMBtu is being sold internationally at prices close to US$20/ MMBtu. Such margins are generating extraordinary cash flows, strengthening balance sheets, and accelerating expansion plans.

The market response has been swift. American LNG companies are raising financing, expanding export terminals, and recording gains in stock valuations. With capacity expected to grow significantly over the next five years, the current crisis is not just a short-term windfall—it is reinforcing America’s long-term position in global energy markets.

Yet, there are limits to this advantage. Persistently high LNG prices risk pushing developing economies toward cheaper alternatives such as coal or renewables. Countries like Pakistan have already reduced LNG imports in favor of solar and battery solutions, a trend that could widen if prices remain elevated.

The conclusion is clear. The disruption of Gulf energy supplies has created a vacuum—and American LNG exporters are filling it with remarkable speed and profitability. In a conflict defined by uncertainty, America’s LNG industry stands out as a decisive economic winner.