PSX benchmark index up 3.0%WoW

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

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

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

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

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

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

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

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

Favorable financial results for the quarter ended June 30, 2026 would support market sentiment in the near term. Market continues to trade at attractive valuations.

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

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

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

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

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

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

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

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

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

Time for Riyadh to Reassess Its Security Doctrine

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

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

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

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

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

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

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

PSX benchmark index declines 2.7%WoW

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

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

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

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

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

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

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

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

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

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

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

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

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

Market continues to trade at attractive valuations.

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

US-Saudi Nuclear Deal Built on Contradictions

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

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

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

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

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

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

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

Washington Is Not Changing Course - It Is Buying Time

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

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

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

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

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

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

Oil Is No Longer a Weapon

For decades, a major military conflict involving Iran would almost certainly have sent global oil prices soaring. Conventional wisdom held that any disruption in the Persian Gulf would trigger an energy crisis, fuel inflation, and push the world economy toward recession. Yet, nearly five months into the US-Iran war, oil prices have remained relatively stable. This apparent contradiction deserves closer examination.

The foremost reason is that the conflict has not significantly disrupted physical oil supplies. Energy markets react less to military headlines than to actual interruptions in production and transportation. Despite intense hostilities, oil has continued to flow.

The Strait of Hormuz, through which nearly one-fifth of the world's seaborne oil trade passes, remains open. Although shipping costs and insurance premiums have risen, oil tankers continue to transit the waterway. A prolonged blockade would almost certainly have triggered a dramatic spike in crude prices.

Iran has also continued exporting crude oil, primarily to China and, through indirect channels, to other Asian buyers. At the same time, Saudi Arabia, the UAE and other Gulf producers have maintained production, while exports through the Red Sea have largely continued despite heightened security risks.

The global energy landscape has changed fundamentally over the past decade. The United States has emerged as one of the world's largest producers of both crude oil and natural gas, reducing dependence on Middle Eastern supplies. Meanwhile, despite Western sanctions, Russian oil continues to reach international markets through alternative buyers and trading routes, preventing a significant supply shortfall.

Demand-side factors have also played a role. Slower economic growth in China and subdued industrial activity in several major economies have moderated global oil consumption, offsetting much of the upward pressure created by geopolitical tensions.

Perhaps the most important factor is market confidence that none of the principal actors wants to ignite a full-scale energy crisis by destroying vital oil infrastructure or permanently blocking key shipping lanes. Investors have increasingly distinguished between a military conflict and an energy war.

The lesson is unmistakable. The Middle East remains indispensable to global energy security, but today's oil market is more diversified, resilient and interconnected than ever before. As long as production continues, shipping lanes remain open and alternative suppliers keep the market well supplied, oil will struggle to serve as an effective geopolitical weapon. The era when a Middle East conflict automatically plunged the world into an oil crisis may well be coming to an end.

Growing lust for controlling energy routes

The Red Sea is not merely another conflict zone in the Middle East. It has become the latest theatre in an intensifying struggle for control over the world's most critical maritime trade and energy corridors. Following prolonged disruption in the Strait of Hormuz, renewed threats to commercial shipping in the Red Sea suggest that the contest has moved beyond territorial disputes to a broader competition over strategic chokepoints that sustain the global economy.

Much of the international debate remains focused on Yemen's Houthi movement and its attacks on commercial vessels. The Houthis have publicly linked their operations to the Gaza conflict and have demonstrated the capability to target shipping with drones and missiles. Western governments also maintain that Iran provides the group with varying degrees of political, military and technical support. These developments are important, but they do not fully explain the strategic significance of what is unfolding.

The Red Sea and the Strait of Hormuz are connected by more than geography. Together, they form the principal maritime gateway through which a substantial share of Gulf oil, liquefied natural gas and international trade reaches global markets. Disruption at either chokepoint unsettles energy markets. Simultaneous instability at both has the potential to reshape global trade flows, increase transport and insurance costs, fuel inflation and slow economic growth far beyond the Middle East.

This raises an important strategic question: Is the objective simply to disrupt shipping, or to increase the strategic vulnerability of Gulf energy exporters?

Publicly available evidence does not allow a definitive answer. However, it is beyond dispute that prolonged insecurity in these sea lanes weakens the commercial position of Gulf exporters, reduces the attractiveness of the Red Sea–Suez route, and increases dependence on alternative transport corridors. Whether these outcomes are intended or incidental, they carry profound geopolitical consequences.

Modern warfare has evolved. Economic disruption has become a strategic instrument alongside military force. Countries and non-state actors increasingly seek to influence rivals by targeting supply chains, energy infrastructure, financial systems and maritime trade rather than engaging in conventional battlefield confrontations. In this environment, the ability to threaten a strategic waterway may generate political leverage disproportionate to military strength.

Yemen illustrates this reality. A country with limited conventional military power occupies territory overlooking the Bab el-Mandeb Strait, one of the world's most important maritime chokepoints. Geography has given the Houthis an influence extending far beyond Yemen's borders. Their actions demonstrate how relatively inexpensive drones and missiles can compel some of the world's most advanced naval forces to devote enormous resources to protecting commercial shipping.

The question of who benefits also deserves careful examination. The immediate economic losers are evident: Gulf Arab exporters face higher shipping costs and insurance premiums; Egypt risks losing valuable Suez Canal revenue; Europe and Asia confront longer supply routes; global shipping companies absorb higher operating costs; and consumers ultimately pay more. At the same time, prolonged instability can strengthen the strategic position of actors seeking higher energy prices, expanded defence spending, greater geopolitical leverage or a reconfiguration of regional influence. Identifying potential beneficiaries does not establish responsibility, but it is an essential element of serious geopolitical analysis.

The continued vulnerability of commercial shipping despite the deployment of powerful multinational naval forces exposes another important reality. Maritime security in the twenty-first century can no longer be guaranteed solely through conventional naval superiority. Low-cost drones, precision missiles and asymmetric tactics have fundamentally altered the economics of maritime conflict, enabling comparatively weak actors to impose substantial costs on much stronger adversaries.

For policymakers, the central lesson is clear. Viewing the Red Sea crisis solely through the lens of Yemen risks overlooking the larger strategic transformation taking place. Control of maritime chokepoints is becoming one of the defining features of contemporary geopolitics. The competition is no longer confined to territorial boundaries; it increasingly revolves around the ability to influence global commerce, energy supplies and supply chains.

History repeatedly demonstrates that control over trade routes often proves as decisive as victories on the battlefield. From the Strait of Hormuz to the Bab el-Mandeb and the Suez Canal, the struggle for maritime access is shaping the strategic landscape of the twenty-first century. The real question, therefore, is not whether the Red Sea crisis began in Yemen. It is whether the world is witnessing the emergence of a new era in which control of sea lanes becomes the principal instrument of geopolitical power.

Technological Superiority Cannot Guarantee Victory

For months, I have been convinced that President Donald Trump has pursued a strategy aimed at securing nothing less than Iran's unconditional surrender. More than five months into the conflict, however, that objective remains unfulfilled despite the overwhelming military and technological superiority of the United States and Israel. This raises a fundamental question; can military dominance alone compel a determined nation to surrender?

The conflict has steadily moved beyond its originally stated objective of curbing Iran's nuclear and missile programs. Instead, it increasingly appears to have become an effort to weaken the Iranian state itself. The repeated attacks on Iranian infrastructure have intensified human suffering and drawn criticism from those who argue that such operations risk violating international humanitarian law. Whatever the legal verdict may ultimately be, the war has expanded far beyond its declared purpose.

Ironically, the countries paying an increasingly heavy price are America's Arab allies. By hosting US military bases, they have become vulnerable to retaliation despite having little direct stake in the conflict. Their economies, energy infrastructure, shipping routes, and national security now face growing risks as the confrontation deepens.

The greatest lesson of this conflict is that technological superiority cannot guarantee victory against a dispersed and resilient adversary. Precision-guided weapons, advanced intelligence, and air superiority have not eliminated Iran's ability to respond. Even many Western analysts acknowledge that Tehran retains the capability to launch missiles and drones against American military installations, Gulf allies, and commercial shipping transiting the Strait of Hormuz. As long as that capability exists, expectations of forcing Iran into unconditional surrender appear unrealistic.

If President Trump refuses to alter course, America's Arab partners may eventually conclude that protecting their own national interests requires a different approach. They should insist that offensive military operations against Iran are no longer conducted from bases located on their territory and seek a transparent timetable for redefining the role of foreign military forces. If those bases cease to be launch pads for attacks, Iran would have far less incentive to target Arab states.

Any durable regional security arrangement should also include China, whose growing economic and diplomatic influence makes it an indispensable stakeholder in Gulf stability.

My greatest concern is that trust has been severely damaged. The current war erupted while diplomatic engagement was still underway, making future negotiations far more difficult. Peace cannot rest on demands for unconditional surrender. It requires credible diplomacy, mutual security guarantees, and respect for commitments. The enduring lesson of this conflict is unmistakable: technological superiority may win battles, but it cannot, by itself, guarantee political victory.

Growing Discontent Across the Arab World

As the conflict between the United States and Iran enters a more dangerous phase, another challenge is quietly emerging across the Middle East. While global attention remains focused on air strikes, missile exchanges and military strategy, America's Arab partners are confronting a growing strategic dilemma. The longer the war continues, the greater the political, economic and security costs they will have to bear. For many Arab governments, patience is not unlimited.

For decades, the United States has been the principal security partner of several Gulf states, maintaining military bases and providing strategic protection against external threats. Today, however, those same military installations have become potential targets for Iranian retaliation. Every attack on a US base in the Gulf exposes the host country to risks it neither initiated nor seeks.

As tensions escalate, Arab governments face the difficult task of preserving their security partnerships with Washington while preventing their own territories from becoming battlefields in a widening regional conflict.

The economic implications are equally serious. Gulf economies are no longer driven solely by oil exports. Through ambitious diversification programs, countries across the region are investing heavily in tourism, finance, technology, logistics and manufacturing. These reforms require political stability, investor confidence and uninterrupted trade. A prolonged war threatens all three. Rising insurance premiums, uncertainty in financial markets and disruptions to maritime commerce could undermine years of economic planning.

The Strait of Hormuz and the Red Sea remain two of the world's most important maritime corridors. Any disruption to these routes would directly affect the export-dependent economies of the Gulf and reverberate throughout the global economy. While energy prices have remained relatively stable so far, Arab leaders understand that a prolonged conflict could eventually jeopardize both regional prosperity and international energy security.

Equally significant is the political dimension. Across the Arab world, public concern over regional instability and humanitarian suffering continues to grow. Governments must balance their strategic ties with Washington against the expectations of their own citizens, who increasingly want their countries to avoid becoming participants in another prolonged regional war. This balancing act becomes more difficult with every passing day.

The conflict also threatens to reverse the diplomatic progress achieved in recent years. Several Arab states have worked to reduce regional tensions, rebuild diplomatic relationships and promote economic cooperation. A wider war could undo those gains, deepen regional polarization and weaken collective efforts to build a more stable Middle East.

History offers a sobering lesson - wars in the Middle East rarely remain confined to their original battlefield. These spill across borders, reshape alliances and leave behind long-lasting political and economic consequences. Military victories may be celebrated in the short term, but the costs of prolonged conflict are borne by entire societies.

For America's Arab partners, the overriding priority is not the military defeat of Iran or the strategic success of Washington. Their foremost interest lies in safeguarding their sovereignty, protecting their economies and preserving regional stability. As the costs of continued escalation mount, pressure for diplomacy will inevitably grow.

The longer the war continues, the greater the Arab world's discontent—and the stronger the demand for a political solution that ends the cycle of confrontation before it engulfs the entire region.

 

Seven Days of US Strikes, No Strategic Breakthrough

Seven consecutive days of United States air strikes on Iran have raised a fundamental question, has Washington moved any closer to achieving its strategic objectives? Judging by the available evidence, the answer appears far from convincing. Military campaigns are ultimately measured not by the number of missiles fired, but by the political and strategic outcomes they produce.

Despite the intensity of the operation, remarkably little official information has been released about the military targets destroyed or the extent of the damage inflicted. In modern warfare, governments are usually quick to showcase decisive battlefield successes. The absence of detailed battle damage assessments has inevitably fueled speculation that the campaign has yielded fewer tangible results than expected.

Equally concerning are reports that civilian infrastructure and public utilities have been affected. If the intention is to increase economic hardship and public suffering in the hope of provoking unrest against Tehran, such a strategy carries significant legal, moral and political risks. Under international humanitarian law, deliberate attacks on civilian objects that are not legitimate military targets could raise serious questions about compliance with the laws of armed conflict. Greater transparency is therefore essential.

The broader strategic picture also remains uncertain. One apparent objective has been to pressure Iran by disrupting regional energy security through the Strait of Hormuz. Yet global oil markets have remained relatively calm, with crude prices staying below the psychologically important threshold of US$100 per barrel. Markets appear unconvinced that energy supplies will face prolonged disruption.

Attention is now increasingly focused on the Red Sea, another critical maritime corridor for global trade and Gulf energy exports. Any escalation there would broaden the conflict, increase risks to international shipping and place additional economic and political pressure on Arab oil-exporting states.

Perhaps the campaign's most significant consequence has been political rather than military. Iranian retaliatory strikes against American military installations in Gulf countries have heightened regional tensions and risk fuelling anti-American sentiment. For governments hosting US military bases, the political cost of continued escalation could become increasingly difficult to manage.

History offers a consistent lesson - air power can destroy military assets and infrastructure, but it rarely secures lasting political victories on its own. If anything, sustained external military pressure often strengthens national resolve rather than weakens it.

After seven days of strikes, Washington appears to have achieved neither a decisive military breakthrough nor a clear political advantage. Unless diplomacy regains priority, the conflict risks expanding while the prospects for a durable peace continue to diminish.

PSX benchmark index down 3.5%WoW

Pakistan Stock Exchange (PSX) remained under pressure during the week ended on Friday, July 17, 2026. The benchmark index closed the week at 175,803, down 6,439 points or 3.5%WoW, with average daily trading volume declining to 911 million shares, down 29%WoW.

During the week market driven by uncertainties surrounding the US-Iran conflict, with the US threatening to strike Iran’s energy facilities.

Re-imposition of the naval blockade of Strait of Hurmuz pushed oil prices above US$86/bbl, the highest level since the MOU was signed between the two countries.

On the macroeconomic front, Current Account posted a deficit of US$139 million in FY26, as against a US$1.8 billion surplus during the same period last year.

Net FDI dropped 34%YoY to US$1.6 billion in FY26.

Foreign exchange reserves held by State Bank of Pakistan (SBP) decreased by US$1.2 billion to US$17.2 billion as of July 10, 2026, due to debt repayments.

LSM index increased by 6%YoY in 11MFY26.

Auto sales rose 33%YoY for the industry in FY26 to 244,000 units, led by stable prices, lower financing rates, and discount offers by OEMs.

IT exports surged 21%YoY to a record high of US$4.6 billion in FY26.

Other major news flow during the week included: 1) HSD/MS price are likely to be increased over the weekend, 2) Electricity generation marginally increased by 1%YoY in FY26, 3) Textile exports inched up to US$17.9 billion in FY26, 4) Largest LNG carrier berthed at Port Qasim, and 5) Pakistan, Saudi Arabia agreed to expand energy cooperation.

Active sectors were: Jute, Refinery, and Technology & Communication, while lagged included: Textile Weaving, Synthetic & Rayon, and Transport.

Major selling was recorded by Mutual Funds amounting to US$37.6 million, while major buyers were Foreigners and Individuals aggregating to US$33.2 million.

Top performing scrips were: PIOC, CNERGY, and TPLRF1, while laggards included: IBFL, KTML, YOU, KEL, and ISL.

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

Additionally, favorable financial results for the period ended June 30, 2026 would support market sentiment in the near term. Market continues to trade at attractive valuations.

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

Why Is Iran Reluctant to Attack Israel Directly?

Every time hostilities flare in the Middle East, a familiar pattern emerges. Israel strikes Iranian targets, and Iran often retaliates by targeting US military installations or interests in the region rather than launching a sustained direct attack on Israel. This recurring pattern raises an intriguing question, if Israel is Iran's declared adversary, why does Tehran so often avoid direct military confrontation?

The answer lies not in fear alone but in strategic calculation.

Iran understands that a large-scale attack on Israel would almost certainly trigger an overwhelming response. Israel possesses formidable military capabilities and enjoys unwavering political, diplomatic, and military backing from the United States. A direct war could inflict severe damage on Iran's military infrastructure, economy, and internal stability. No responsible government willingly enters a conflict where the costs are likely to far outweigh the gains.

Military realities reinforce this caution. Israel has developed one of the world's most sophisticated, multi-layered missile defense systems. While these defenses cannot intercept every missile or drone, they substantially reduce the effectiveness of mass attacks. Iran must therefore consider whether expending expensive missiles would achieve meaningful military objectives or merely expose the limitations of its own arsenal.

Geography further complicates the equation. Iran and Israel do not share a common border. Any missile or drone attack must cross or approach the airspace of several regional states. Countries such as Jordan have, on occasion, intercepted projectiles traversing their airspace to protect their own national security. These operational challenges make sustained direct attacks considerably more difficult.

Instead, Iran has adopted what appears to be a strategy of calibrated retaliation. Rather than seeking decisive military victory, it aims to impose costs while preventing the conflict from escalating into a regional war. This explains Tehran's preference for targeting US military bases, conducting cyber operations, disrupting maritime traffic, and relying on allied armed groups to project influence.

From Iran's perspective, the United States is not merely Israel's ally but its principal strategic enabler. Washington provides military assistance, intelligence, advanced weaponry, and consistent diplomatic support. Consequently, Tehran may calculate that increasing pressure on American military assets sends a message to both Washington and Tel Aviv without immediately crossing the threshold of an all-out war.

This does not mean Iran lacks the capability or the willingness to strike Israel directly. It has done so under exceptional circumstances. However, those attacks have generally been carefully measured, suggesting that deterrence and escalation management remain at the heart of Iranian strategy.

The Middle East is often viewed through the lens of ideology and rhetoric, yet military decisions are usually driven by hard strategic calculations. Iran's conduct reflects this reality. Rather than pursuing an unrestricted war with Israel, Tehran appears to be balancing retaliation with restraint, seeking to preserve its deterrent capability while avoiding a conflict that could threaten the survival of the Iranian state.

Understanding this distinction is essential. In geopolitics, actions are rarely dictated by slogans alone. More often, they are shaped by the cold arithmetic of power, capability, and consequence.

Why Are We Scared of Telling the Truth?

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

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

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

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

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

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

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

Louder Rhetoric, Diminishing Credibility

The United States Central Command (CENTCOM) has claimed that its latest military campaign struck nearly 140 targets in Iran—far exceeding the scale of its previous rounds of attacks. Whether this figure is accurate or not is almost secondary. More important is the strategic narrative such claims are designed to create and the political objectives they may serve.

One emerging perception is that the conflict is no longer confined to military confrontation. It has evolved into a struggle over energy markets, regional influence, and financial leverage. Continued instability in the Gulf discourages investment, disrupts confidence, and keeps a strategic premium on energy supplies. Critics argue that prolonged tension can also benefit major energy exporters outside the region by sustaining higher oil and gas prices.

A second perception is that repeated references to Iranian attacks on American military facilities reinforce the argument for maintaining an extensive US military presence across the Gulf. From this perspective, every escalation strengthens the case that these bases remain indispensable for the security of America's Arab partners, even though their continued presence itself remains a subject of debate.

There are also wider economic considerations. Analysts have suggested that continued hostilities delay any possibility of normalizing Iran's oil exports, resolving disputes over frozen Iranian assets, or addressing future claims for compensation arising from wartime destruction. As long as the conflict persists, diplomacy inevitably takes a back seat to military calculations.

Perhaps the greatest casualty, however, is credibility. In modern warfare, information has become as powerful as missiles. Every claim of battlefield success is instantly challenged by satellite imagery, independent analysts, and social media. Governments no longer enjoy an uncontested monopoly over the narrative. If official statements are perceived to exaggerate military achievements or downplay setbacks, public trust erodes rapidly.

History reminds us that wars are fought not only on the battlefield but also in the realm of perception. Military victories may shape today's headlines, but credibility determines tomorrow's legitimacy. In an age of instant information, winning the narrative may ultimately prove more difficult—and more important—than winning the war itself.

Who Is the Terrorist? The United States or Iran

"Terrorist" is perhaps the most powerful label in modern geopolitics. Once attached to a country, organization or individual, it often becomes sufficient to justify sanctions, military intervention and even targeted killings. Yet a fundamental question remains unanswered: Who decides what constitutes terrorism, and are the same standards applied to everyone?

The continuing confrontation between the United States plus Israel and Iran exposes this dilemma. Although, a ceasefire was announced in April, military exchanges have continued, with each side accusing the other of violating the agreement. Amid the exchange of accusations, an uncomfortable reality has emerged—the principles of international law appear to change depending on who is using force.

The United States and Israel have defended targeted strikes against senior Iranian military commanders and political leaders as legitimate acts of self-defense. Their critics argue that these operations amount to political assassinations carried out without judicial process and in violation of international law.

The disagreement is not merely legal; it goes to the heart of how the international community defines legitimate use of force.

Similarly, Iran has maintained that military bases used to launch attacks against its territory become lawful military targets, regardless of where they are located. Arab governments, understandably, fear that such retaliation could draw the entire region into a wider conflict. At the same time, competing media narratives often shape public perception more effectively than independently verified facts.

The latest allegation that Iran seeks to assassinate US President Donald Trump has further intensified tensions. If such a plot exists, it deserves unequivocal condemnation. However, it also raises a difficult question. If the targeted killing of foreign leaders or senior officials can be justified as self-defense when undertaken by one state, on what legal or moral basis should similar conduct be judged differently when attributed to another?

This is not an argument in favor of political assassination by any nation. Rather, it is a call for consistency. International law cannot retain credibility if identical actions are described as "self-defense" when committed by allies and "terrorism" when attributed to their adversaries.

The real question, therefore, is not simply who the terrorist is. The more important question is whether the world is prepared to uphold one universal standard of justice—or continue living with two.

 

At PSX volatility spikes daily trading 25.7%WoW

Pakistan Stock Exchange (PSX) remained volatile during the outgoing week driven by uncertainties surrounding the US-Iran conflict, pushing oil prices to US$80/ bbl before retreating. The benchmark index declined 4,626 points decline on Wednesday, but recovered partially on Friday. The index closed the week at 182,242 points, down 3,130 points or 1.7%WoW. Market activity remained strong, with average daily trading volume up 25.7%WoW to 1.3 billion shares.

On the macroeconomic front, worker remittances for June 2026 increased by 2%YoY to US$3.5 billion, taking FY26 total to a record high of US$41.6 billion, up 9%YoY.

Foreign exchange reserves held by State Bank of Pakistan (SBP) were reported at US$18.5 billion, as of July 03, 2026.

Yields during first FY27 T-Bills auction fell by 31-40 bps across all tenors.

Cement sales rose 18%YoY in June 2026 to 4.3 million tons, led by domestic dispatches, taking full year FY26 sales to 50.5 million tons, a 4-year high.

Other major news inflow during the week included: 1) Saudi makes biggest oil price cut in decades, 2) GoP buys more LNG as flows through Hormuz fail to recover, 3) IMF forecasts 3.5% growth rate for Pakistan’s economy in FY27, 4) RDA inflows increased to US$2.8 billion in FY26, and 5) Removal of MDR to provide leverage to banks.

Top performing sectors were: Synthetic & Rayon, Refinery, and Leasing Companies, while lagged included: Sugar & Allied Industries, Close-End Mutual Funds, and Transport.

Major buying was recorded by Individuals and Banks aggregated US$24.5 million. Major sellers were Companies and Mutual Funds with flows of US$20.9 million and US$11.3 million, respectively.

Top performing scrips were: IBFL, GHNI, CNERGY, PGLC, and LOTCHEM, while laggards included: MEHT, NPL, TPLRF1, KTML, and SNGP.

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

Additionally, favorable financial results for the period ended June 30, 2026 would support market sentiment in the near term. Market continues to trade at attractive valuations.

The brokerage house forecasts the benchmark Index 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.

Iran seeks to assassinate Donald Trump

Recent media reports alleging that Iran seeks to assassinate US President Donald Trump, alongside claims that Trump has instructed the United States to launch a devastating military response should such an attack occur, raise a far more important question than the headlines themselves. Are the rules governing the use of force universal, or are they reserved only for the powerful?

This is not a debate about personalities. It is a debate about principles.

For years, the United States and Israel have defended targeted killings of foreign military and political leaders as legitimate acts of self-defense or national security. Their argument is that extraordinary threats justify extraordinary measures. However, if this doctrine is accepted as a legitimate principle of international conduct, can other states not invoke the very same rationale when they perceive an existential threat?

The issue is not whether Iran is right or wrong. The issue is whether international law can survive if every country adopts the same standard. A principle that applies only to one nation is not a principle at all; it is simply an expression of power.

International politics has long demonstrated that labels are rarely neutral. One nation's freedom fighter is another nation's terrorist. Likewise, one country's "targeted strike" may be viewed by another as political assassination or an act of war. Perspectives differ, but the consequences remain the same.

Iran has endured US sanctions, diplomatic isolation and repeated military threats for nearly half a century. From Tehran's perspective, these policies represent continuous hostility. It is therefore understandable why successive Iranian leaders have described the United States as the "Great Satan." Whether one agrees with that description is beside the point. The reality is that prolonged confrontation has deepened mistrust on both sides.

History offers a consistent lesson. Political assassinations rarely resolve conflicts. More often, they fuel retaliation, strengthen hardliners, weaken diplomacy and perpetuate cycles of violence. Every action establishes a precedent, and every precedent eventually finds a new claimant.

The world should therefore resist the normalization of assassination as an instrument of statecraft. If the targeted killing of another country's political leadership becomes an accepted practice, no head of state can reasonably expect immunity from the same logic. Such a doctrine would make global politics less stable and far more dangerous.

The United States still has an opportunity to reverse this trajectory. Military threats, sanctions and coercion have failed to produce lasting stability in the Middle East. A renewed commitment to diplomacy, respect for sovereignty and the gradual easing of sanctions would serve regional and global security far better than another cycle of escalation.

The international order cannot be sustained through selective justice. The same rules must govern allies and adversaries alike. Otherwise, the world risks replacing the rule of law with the law of retaliation—a path from which there are no true victors.

The Gulf Must Not Become the Next Casualty

President Donald Trump's latest remarks should be treated as more than political rhetoric. For the Gulf Cooperation Council (GCC), they should serve as a strategic warning. Every indication that the United States is prepared to sustain pressure on Iran rather than prioritize reconciliation raises an uncomfortable question: who stands to lose the most from another prolonged regional confrontation?

The answer is unlikely to be Washington or Tehran. It is the Gulf.

Over the past decade, GCC countries have invested hundreds of billions of dollars to diversify their economies, attract foreign investment and transform themselves into global hubs for trade, finance and tourism. Those ambitions depend on one indispensable ingredient—regional stability. Every new military crisis threatens to undermine years of economic progress.

Modern conflicts are no longer judged solely by territorial gains or military victories. They also reshape energy markets, sustain defence industries, influence financial markets and reinforce geopolitical leverage. Periods of prolonged uncertainty often coincide with higher military spending, increased demand for sophisticated weapons systems and heightened volatility in global commodity and equity markets. International media organizations also benefit from continuous coverage of unfolding crises. Yet the countries closest to the conflict invariably bear the greatest economic and security costs.

Energy remains at the heart of this equation. Any threat to Gulf shipping routes or oil infrastructure immediately disrupts global markets, increases freight and insurance costs and weakens investor confidence. While uncertainty pushes energy prices higher, it also encourages consuming nations to diversify supplies and seek alternative sources, creating long-term challenges for traditional exporters.

The GCC must also confront a strategic reality. Iran possesses limited capability to inflict decisive damage on the United States itself. However, American military installations across the Gulf represent visible strategic assets that could become focal points during any wider regional escalation. Whether justified or not, the presence of these facilities inevitably exposes host nations to risks that originate beyond their own borders.

This does not argue for abandoning long-standing security partnerships. Rather, it calls for a sober reassessment of whether existing arrangements continue to maximize Gulf security or inadvertently increase regional vulnerability. Every sovereign nation has both the right and the responsibility to periodically evaluate defence partnerships in light of changing geopolitical realities.

The Gulf has reached a pivotal moment. "Business as usual" is no longer a strategy. GCC leaders should collectively champion de-escalation, strengthen regional diplomacy and ensure that their territories do not become the principal arena for conflicts driven by external rivalries. Stability—not perpetual confrontation—is the foundation upon which the Gulf's future prosperity, security and global influence will ultimately rest.

Trump’s Iran Policy: Follow the Money, Not the Rhetoric

Donald Trump returned to the White House promising to end America's "endless wars" and restore stability through the "America First" agenda. Yet his handling of Iran has told a different story. Since the fragile US-Iran ceasefire was announced, violations have become almost routine. Washington's position has oscillated between calls for restraint and renewed threats. The latest example came when President Trump declared that the interim deal aimed at ending the conflict was "over," once again injecting uncertainty into already fragile global markets.

The reaction was immediate. Wall Street's major indices slipped as investors reassessed geopolitical risks. The ripple effects reached far beyond the United States. Pakistan Stock Exchange also came under heavy selling pressure before recovering part of its losses by the close. Financial markets have become hostages to political messaging emanating from Washington.

During the US presidential campaign, I wrote that it mattered little whether Donald Trump or Kamala Harris won the election. The occupant of the White House would change, but the powerful interests shaping American foreign policy would remain remarkably constant. Recent developments have only reinforced that conviction.

Washington's Iran policy appears to have become an exercise in managing competing domestic interests rather than pursuing a coherent diplomatic strategy. Every escalation benefits someone. Defence contractors receive larger orders as regional insecurity grows. Oil companies gain from heightened uncertainty in energy markets. Wall Street profits from volatility that creates trading opportunities. Major media organizations thrive on continuous crisis coverage that attracts audiences and advertising revenues.

None of these realities proves that any one of these powerful constituencies dictates White House decisions. But when every major policy shift repeatedly advances their commercial interests, skepticism is both natural and justified. In politics, patterns often reveal more than official statements.

The uncomfortable truth is that modern American foreign policy increasingly resembles a marketplace where geopolitical crises generate economic opportunities for influential stakeholders. Peace rarely produces exceptional corporate earnings. Tension does.

This is why Trump's changing posture towards Iran deserves closer scrutiny. The issue is not whether he personally seeks confrontation or compromise. The more important question is whether any American president can formulate Middle East policy free from the influence of the military-industrial establishment, energy giants, financial markets and the corporate media.

Perhaps the real lesson is this - American presidents come and go, campaign slogans change, and foreign policy narratives evolve. Yet the beneficiaries of prolonged instability appear strikingly familiar. Until that cycle is broken, the world will continue to pay the price for wars that are declared in the name of security but often end by serving the interests of power and profit.