US-Iran War: Will Trump Pay the Price at the Midterms?

The US–Iran war may become President Donald Trump’s biggest political liability ahead of the November 3 midterm elections. Two contrasting outcomes are possible: Republicans could gain seats if Trump delivers a convincing victory, or lose ground if voters blame him for an inconclusive war, soaring energy costs and economic uncertainty. The balance appears to favour the second scenario.

Trump’s approval rating has fallen to a record low, while rising gasoline prices and disruptions to global energy supplies are adding to public discontent. The effective closure of the Strait of Hormuz has complicated Washington’s efforts to stabilize oil markets, while the absence of a credible exit strategy raises questions about the war’s ultimate objectives.

Iran, too, appears to understand the political stakes. By keeping negotiations alive without rushing towards a settlement, Tehran hopes to deny Trump a diplomatic victory before the elections. Its calculation is straightforward - the longer the conflict continues, the greater the potential political cost for the White House. Yet this strategy is not without risks, as sanctions, the US maritime blockade and economic hardship are also hurting Iran.

The real battlefield may therefore be shifting from Iran to the American ballot box.

For Democrats and other defenders of institutional checks and balances, the midterms offer an opportunity to curb Trump’s political power. Having failed to remove him through impeachment, his opponents may seek to achieve through elections what they could not accomplish through Congress’s removal process.

A Democratic victory would not dislodge Trump from the presidency, but control of either chamber could strengthen congressional oversight, obstruct parts of his legislative agenda and intensify scrutiny of his conduct of the war.

My assessment is that Republicans face a greater risk of losing seats than making significant gains. American voters may be less interested in claims of military success than in the cost of the conflict, its uncertain outcome and its impact on their daily lives.

The November 3 elections could thus deliver a powerful message - a president may initiate a war, but he cannot dictate how voters judge its consequences.

Mehrdad Akhlaqi Ketabchi New Defence Minister of Iran

According to Reuters, Iran's parliament approved Mehrdad Akhlaqi Ketabchi as defence minister on Sunday, ending months of interim leadership at the ​ministry and placing a former defence sector veteran in ‌charge of the country's defence production and procurement apparatus.

Akhlaqi replaces Majid Ebn al-Reza, who took over in an interim capacity after then Defence Minister Aziz Nasirzadeh ​was killed by US-Israeli strikes in February.Akhlaqi has spent decades ​in Iran's defence industry and has held senior roles ⁠in its aerospace and missile sectors. He is subject to US ​and EU sanctions over his work in Iran's defence sector.

In a program ​presented to lawmakers, Akhlaqi pledged to rebuild the country's military-industrial infrastructure, accelerate the development of defence technologies and expand cooperation with private-sector companies.

"If the American enemy ​makes another miscalculation, the response of the valiant Iranian people and ​the fighters of Islam will be surprising and extensive," he said, adding that ‌Tehran ⁠had taken necessary measures to counter the potential use by the US of its "mother of all bombs" against Iran.

CNN reported this week that the US has developed strike plans that could include using the GBU-43/B ​Massive Ordnance Air ​Blast Bomb, also ⁠known as the "mother of all bombs", against Iranian energy infrastructure and nuclear sites if President Donald Trump ​orders renewed combat operations.

The weapon is the largest non-nuclear ​bomb ⁠in the US arsenal.

"The US President should focus on ensuring his forces are withdrawn safely from our region. If he drops a single bomb, ⁠he ​will have to see how many of ​his troops end up being carried out of the region in a horizontal position," ​Akhlaqi said.

US may use mother of all bombs on Iran

According to a CNN report, the US military has developed strike plans ​that could include using ‌the so-called "mother of ​all bombs" to target Iranian energy ⁠infrastructure and nuclear sites ​should President Donald Trump ​order renewed combat operations.

The potential deployment of the GBU-43/B Massive Ordnance Air Blast Bomb, the largest ‌non-nuclear ⁠bomb in the US arsenal, would mark a significant escalation in the ​conflict, ​although ⁠officials familiar with military planning discussions ​told CNN questions remain ​over ⁠its effectiveness in achieving Washington's strategic objectives.

Trump is facing pressure to bring an end to the deeply unpopular war, as Republicans brace for potential political backlash from voters in the upcoming midterm elections and there is little indication the two countries are close to a negotiated resolution after more than six months of US bombing.

While the US military continues to provide Trump with options for potential strikes against outstanding Iranian targets, some officials continue to privately question whether the White House has a strategy that incorporates those plans in a way that could actually end the war.

For months, Trump and his advisers have discussed options that could act as a “definitive” end to the war, aware of how unpopular the conflict has become among Americans.

While some administration figures have characterized the war as essentially won, Trump has been more guarded in recent remarks, stopping short of declaring victory and saying the US still has unfinished business in the country.

Behind the scenes, Trump has also cast doubt on some outside allies who have encouraged him to simply bring US troops home and move on. Doing so, Trump has argued, would look like defeat.

Over the course of the last several weeks, White House advisers have held meetings to discuss various options for Iran. While Trump announced publicly that he would not take new actions before the midterms, several advisers said privately they didn’t know whether that statement was definitive or could change before election day.

Trump has ordered the military to develop additional strike packages against Iranian targets that include “a lot of energy infrastructure” and the potential use of a MOAB, one of the sources told CNN.

The phrasing used was that this attack would come “prior to US retrograde in CENTCOM AOR (area of responsibility),” indicating the administration could launch the additional strikes, attempt to declare victory and quickly pull everyone out.

A second source said military plans for striking Iranian nuclear sites, including Pickaxe Mountain, also explicitly call for using the MOAB. In recent months, Trump has repeatedly threatened to strike Pickaxe, where the US and Israel believe Tehran has stored components of its nuclear program, even after pausing full combat operations earlier this year, and Trump continues to emphasize that his goal is to ensure Iran never obtains a nuclear weapon.

Another US official noted that when the military plans, it develops a menu of options for policymakers that range from the high-end to low-end. Higher-end targets, including those that are located deep underground, require bigger bombs, and the MOAB is the biggest.

But there are questions around whether the MOAB would be an effective munition to use against Iran’s nuclear facilities and other sites that are located deep underground. While the GPS-guided bomb is capable of destroying an area equivalent to nine city blocks, it likely lacks the capability to penetrate deep enough under the surface to destroy the suspected nuclear facilities at Pickaxe, which is believed to be fortified by layers of granite, and other remaining Iranian nuclear sites.

Many within the administration as well as outside analysts agree that the only way to decisively defeat Iran would be through a major operation involving ground troops, a commitment that could potentially cost thousands of American lives. The Pentagon considers all scenarios, so those plans exist, but as of now no one in the administration is arguing for such drastic action.

Trump has indicated he has little interest in putting US boots on the ground in Iran but his desire to end the conflict as soon as possible presents a political dilemma for a president who is keenly aware of how unpopular the war has become yet has been unable to secure a diplomatic agreement that would bring it to a close.

Top Trump administration officials and military planners have been focused, for weeks, on finding an off-ramp that gives Trump a “symbolic” win — at minimum — he can try to sell to the American people without preventing a potential diplomatic breakthrough, starting with an agreement to reopen the Strait of Hormuz, CNN has reported.

A fourth source familiar with the Pentagon’s recent planning discussions on Iran told CNN that military officials had developed some options that would amount to a “fireworks show,” with the goal of providing Trump an off-ramp from the conflict even if those strikes fail to accomplish his stated goals for starting the war in the first place.

And despite Trump’s recent pledge to hold off on launching additional strikes before the midterms, the US military already appears to be preparing for potential Iranian retaliation should the president give the go-ahead.

The next turnover of US troops deployed to CENTCOM is also expected to take place within the next few weeks, a US official who acknowledged it is possible some of the personnel who rotate out of the region, may not be replaced by fresh service members.

 

PSX benchmark index closes almost flat WoW, despite volatility

Pakistan Stock Exchange (PSX) witnessed volatility during the week ended on October 16, 2026, due to political uncertainty and persistent geopolitical tensions in the Middle East. The Index declined by 670 points to close at 166,420, down 0.4%WoW.

Brent crude price remained elevated amid continued disruptions to energy supplies through the Strait of Hormuz and renewed attacks on Saudi energy infrastructure.

On the macroeconomic front, Pakistan recorded a current account deficit (CAD) of US$356 million in September 2026, as compared to a surplus of US$123 million during the same period last year, reflecting some added pressure on the external account.

Remittances by overseas Pakistanis rose 13%YoY in September 2026 to US$3.6 billion.

The GoP raised PKR660 billion through the latest T-Bills auction, with yields remaining broadly stable following the sharp repricing in the previous auction.

Foreign exchange reserves held by State Bank of Pakistan (SBP) increased to US$21.47 billion as of October 09, 2026.

Passenger car sales declined by 9.8%YoY to 10,939 units in September 2026.

Textile exports grew by 5.2%YoY during 1QFY27, led by growth in ready-made garments, knitwear and cotton yarn.

Other major news flow during the week included: 1) FBR collection exceeded Q1 collection target, 2) IMF projected Pakistan’s GDP growth at 3.5% for FY27, while forecasting inflation at 9.9%, 3) Pakistan received first LNG cargo of October, 4) Refineries produced 92,482 tons of LPG in July-August, and 5) RDA attracted US$251 millio in September.

Leasing companies, Woolen, and Jute remained top performing sectors, while laggards included:  Apparel, Technology & Communication, and Transport.

Major selling was recorded by Mutual Funds amounting to US$10.7 million. On the contrary, major net buyers were Banks (US$8.3 million) and Companies with US$6.7 million.

Top performing scrips were: BNWM, AGP, IMAGE, BML, and JDWS, while laggards included: POL, PTC, APL, CPHL, and THCCL.

AKD Securities expects the market to improve on the back of strengthening economic indicators. Additionally, easing inflationary pressures would reduce probability of monetary tightening. Moreover, any positive development on Middle East conflict could moderate international oil prices and serve as a key trigger for market as it paves the way for monetary easing.

The 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.

American Superpower Image Is Being Tarnished

The image of the United States as the world's undisputed superpower is facing an unprecedented test. A succession of strategic setbacks, policy reversals and strained alliances is raising a fundamental question, can Washington still translate its overwhelming military and economic strength into lasting geopolitical gains?

The latest agreement allowing Russian diesel supplies to global markets, accompanied by temporary sanctions relief, offers a telling example. After years of seeking to constrain Moscow over its war in Ukraine, Washington has turned to Russia to ease fuel-market pressures exacerbated by the Middle East conflict. The move highlights the limits of economic sanctions when geopolitical ambitions collide with domestic necessities.

The US-Israel war on Iran presents an even greater strategic challenge. Despite months of intensive bombing and the reported killing of Iran's supreme leader, Washington has not secured a decisive outcome. Iran's continued resistance and its ability to disrupt regional energy infrastructure demonstrate that superior firepower does not automatically translate into political submission.

The withdrawal of US forces from Iraq after more than two decades further complicates Washington's regional legacy. Although, the departure follows an earlier agreement and can be presented as a change in military strategy, Iran and its allies have celebrated it as a victory. Concerns about Tehran's expanding influence underline the difficulty Washington has faced in shaping Iraq's political and security landscape.

Saudi Arabia's experience raises equally uncomfortable questions. Despite its longstanding security partnership with Washington, the kingdom has suffered attacks on critical infrastructure, including Riyadh's airport and major energy facilities. Washington's reluctance to provide the direct military intervention Riyadh sought has fuelled doubts about the practical limits of American security guarantees.

Meanwhile, China and Russia are exploiting the shifting strategic environment to expand their influence. Their growing engagement with regional governments does not mean that either can replace America's entire security role, but it gives Middle Eastern states greater room to diversify their partnerships.

The central issue is no longer whether America possesses formidable power; it clearly does. The question is whether that power can deliver the political outcomes Washington seeks. A superpower's standing depends not only on its capacity to wage war, but also on its ability to achieve objectives, protect partners and sustain international confidence. If these shortcomings persist, America's global leadership will face an increasingly difficult test.

Saudi Security Vulnerabilities or Lapses

Saudi Arabia’s decision to stop issuing public warnings of imminent missile and drone attacks shortly before deadly strikes hit Riyadh airport raises serious questions about the kingdom’s security preparedness and crisis management. According to Reuters, the attacks killed at least 18 people and wounded more than 300, exposing the challenges Riyadh faces in protecting its population and maintaining an image of stability amid an escalating regional conflict.

The central question is whether the attacks exposed inherent vulnerabilities in Saudi Arabia’s security arrangements or lapses in managing an emerging threat. The distinction matters because the remedies are different - structural weaknesses require stronger defensive capabilities, while operational failures demand better coordination, timely communication and accountability.

Riyadh appears to have faced competing priorities: acknowledging the growing threat while avoiding public anxiety and disruption to economic activity. However, withholding warnings cannot eliminate danger; it can leave residents and visitors less prepared to respond.

Reuters reported that Saudi Arabia’s early-warning system had remained silent despite mounting Houthi attacks. Officials reportedly told a Western ally that alerts were disruptive and that some citizens had complained about being awakened at night. If accurate, this explanation raises concerns about how public safety was weighed against convenience. An early warning cannot prevent every casualty, but it can give people precious time to seek shelter.

The contrast with Qatar, Bahrain and Kuwait is instructive. Their use of mobile alerts and sirens demonstrates the importance of communicating potential threats, even when warnings disrupt daily routines. Public information should be treated as an essential component of national defence rather than an obstacle to normal economic activity.

Saudi Arabia also faces a formidable structural challenge. Its vast territory contains airports, oil installations, pipelines and other strategic assets that cannot all be protected simultaneously. Limited interceptor supplies and air-defence capacity complicate the task. Strengthening early-warning systems, improving defensive coordination and prioritizing critical infrastructure must therefore go hand in hand.

The economic stakes are substantial. Saudi Arabia’s investment and diversification ambitions depend partly on investor confidence and perceptions of stability. The reported withdrawal of senior oil executives from a major energy conference in Riyadh illustrates how security concerns can disrupt international engagements despite official assurances that economic plans remain on track.

Ultimately, Saudi Arabia must demonstrate that its pursuit of normalcy does not come at the expense of public safety. Whether the problem lies in structural vulnerabilities, operational lapses or both, restoring confidence requires credible warnings, stronger defensive capabilities and effective crisis management. In an era of expanding missile and drone warfare, projecting stability is no substitute for delivering security.

US Foreign Policy Is Becoming Morally Bankrupt

Over the years, many analysts, including myself, have questioned whether the United States consistently adheres to the ethical principles it expects other nations to respect. Under Donald Trump, the contradiction between Washington’s rhetoric and its actions has become increasingly difficult to ignore. Democracy, sovereignty and a rules-based international order are presented as universal principles, yet their application often appears conditional on American strategic and economic interests.

The war against Iran, the killing of its Supreme Leader and Washington’s pursuit of regional objectives raise serious questions about the limits of American power. Similarly, the arrest of Venezuela’s president and the drive to control the country’s energy resources have reinforced concerns that national sovereignty becomes negotiable when a government challenges Washington’s interests.

In South Asia, allegations of American involvement in political changes in Pakistan and Bangladesh have fuelled suspicions that Washington’s commitment to democracy is selective. Such allegations require scrutiny, and domestic political dynamics cannot be ignored. Nevertheless, the perception that external powers can influence political outcomes undermines the credibility of the principles they claim to defend.

The latest Russian diesel arrangement offers another revealing example of Washington’s shifting priorities. The reported purchase of 300,000 tons of Russian diesel, despite American efforts to restrict Moscow’s energy revenues over its war against Ukraine, raises questions about the consistency of US policy. When energy security and domestic economic pressures become pressing, previously declared strategic principles appear open to adjustment.

The implications extend beyond energy markets. Ukraine, under President Volodymyr Zelensky, has depended heavily on American military and financial support to resist Russia’s invasion. Yet Trump’s reported suggestion that Ukraine needed new leadership following disagreements over policy raises a fundamental question, is American support grounded in a consistent commitment to sovereignty, or is it conditional on political compliance?

Here lies the contradiction. Washington has supported Ukraine’s resistance to Russian aggression, yet its own interests can lead it towards arrangements that potentially benefit Moscow. The immediate priorities of American consumers and voters may take precedence over the strategic concerns of an ally fighting for its territorial integrity.

The issue is not whether America has the right to pursue its national interests. Every sovereign state does. The question is whether Washington can claim moral leadership while applying one standard to its adversaries and another to itself.

Military supremacy can compel compliance, economic power can impose costs, and political pressure can influence governments. None, however, guarantees moral authority. When principles become negotiable and national interests override proclaimed values, the result is a crisis of credibility.

A superpower may impose its will through military and economic strength, but it cannot command moral authority. American foreign policy risks losing precisely what Washington claims to defend - the moral legitimacy of its leadership.

The Iran War: Is the Real Target Saudi Arabia?

The US-Israel war on Iran has exposed a harsh reality: American military dominance does not necessarily translate into political acceptance in the Middle East. More importantly, the conflict has raised a fundamental question about whose security Washington is really protecting.

For decades, the United States has justified its military bases across Gulf Cooperation Council (GCC) countries as essential to protecting Arab monarchies against external threats, particularly Iran. Yet the use of these bases during the war has reinforced a perception that American military power serves Israeli security interests, potentially at the expense of the host countries. Instead of providing an unquestionable security umbrella, these arrangements risk exposing Arab states to retaliation.

China’s mediation of the 2023 Saudi-Iran rapprochement had already challenged Washington’s longstanding narrative that Iran posed a greater threat to Arab interests than Israel. Riyadh’s decision to restore diplomatic relations with Tehran demonstrated that regional security could be pursued through engagement rather than permanent confrontation.

The prolonged disruption of shipping through the Strait of Hormuz, attacks on oil tankers and energy infrastructure, and mounting pressure on Gulf economies have further exposed the vulnerabilities of Arab oil producers. These developments raise a critical question, are GCC states merely collateral victims of the war, or are they also facing strategic pressure to reconsider their regional alignments?

President Donald Trump’s reported request for Russia to supply 300,000 tons of diesel highlights the conflict’s wider energy repercussions. Although this does not establish a hidden agenda, it illustrates how the consequences extend far beyond Iran.

The larger strategic question is whether the conflict is also being used to advance Israel’s regional integration through the Abraham Accords. Saudi Arabia’s recognition of Israel and establishment of diplomatic relations would represent a major diplomatic victory for Benjamin Netanyahu and strengthen Israel’s regional position.

My interpretation is that the war may be evolving into a pressure campaign against GCC monarchies, particularly Saudi Arabia, compelling them to succumb to American pressure: recognize Israel, establish diplomatic relations and accept its regional supremacy.

This remains a strategic hypothesis, not a proven war objective. Nevertheless, it deserves serious scrutiny. The ultimate irony would be that a war ostensibly directed against Iran ends up pressuring Arab monarchies to accept a regional order shaped around Israeli supremacy—while simultaneously weakening confidence in American protection.

Who Really Seeks Control of the Red Sea Gateway?

The United States has repeatedly intervened in conflicts across the Middle East, often justifying its military presence as essential to regional stability and the protection of international trade. Yet an important question remains, do these interventions resolve security crises, or can they also create opportunities to expand American strategic influence? The confrontation involving Saudi Arabia, Yemen’s Houthis and the United States deserves scrutiny from this perspective.

The Houthis intensified attacks on shipping in the Red Sea after the Gaza war erupted in October 2023, declaring their campaign a means of pressuring Israel. Vessels linked to Israel became particular targets, although the attacks and their consequences extended beyond Israeli shipping. International trade was disrupted, seafarers were endangered and the security of the Bab el-Mandeb Strait became a global concern.

However, threatening shipping bound for Israel is not the same as deliberately targeting Saudi Arabia. Each reported attack must be examined on its own evidence, including the identity of the attacker, the intended target and the strategic purpose. Iranian support for the Houthis does not, by itself, establish Iranian direction of every operation.

Washington has presented its military campaign against the Houthis as a response to threats against navigation and regional security. But military intervention can produce consequences beyond its declared objectives. By expanding its operational presence, surveillance and influence over maritime security, the United States can strengthen its position around a gateway connecting the Red Sea with the Gulf of Aden and the wider Indian Ocean.

This raises a question that deserves serious investigation, could the escalation of hostilities be creating the strategic conditions for greater American influence over access to one of the world's most important shipping corridors?

The possibility should not be confused with proof that Washington engineered the confrontation or that a US proxy is responsible for attacks attributed to the Houthis. Such allegations require independently verifiable evidence. Nevertheless, the strategic consequences of military operations merit examination regardless of their stated intentions.

I prefer to frame the broader issue as “US-Controlled Entry and Exit” rather than simply a blockade. Control over a maritime gateway need not involve formally closing it. It can also emerge through military deployments, intelligence capabilities, security partnerships and the ability to influence the conditions under which commercial vessels pass.

The central issue, therefore, is not merely whether the Houthis threaten Saudi Arabia or whether American forces can suppress them. It is whether the resulting security arrangements protect freedom of navigation for all nations or gradually concentrate strategic leverage in the hands of an outside power.

The world must distinguish between securing an international waterway and acquiring the power to determine who can use it, on what terms and under whose protection. That distinction may ultimately prove more consequential than the military confrontation itself.

PSX benchmark index declines 0.6%WoW

Pakistan Stock Exchange (PSX) remained volatile during the week ended on October 09, 2026 amid continued attacks on key shipping routes. The benchmark Index declined by 1,066 points or 0.6%WoW to close at 167,089. Market activity also weakened, with average daily trading volume declining by 16.5%WoW to 541 million shares.

Meanwhile, Ukraine’s drone strikes on Russian refineries and concerns over US energy supplies amid Hurricane Isaias kept Brent oil prices above US$100/ bbl, despite improving traffic through the Strait of Hormuz and Trump’s claim that it would refrain from attacking Iran until the midterm elections scheduled for early November 2026.

The IMF reached a Staff-Level Agreement with Pakistan on the 4th review of EFF and 3rd review of RSF, acknowledging the Government’s policies in navigating the Middle East conflict.

Foreign exchange reserves held by State Bank of Pakistan (SBP) increased to US$21.5 billion as of October 02, 2026.

Pakistan raised PKR352 billion in the latest PIB auction, with yields rising across all tenors.

Banking sector deposits rose 14%YoY to PKR39.2 trillion at end August 2026.

Cement offtakes increased 6%YoY to 4.6 million tons in September 2026, reflecting improved local demand due to recovery in construction activity.

Cotton arrivals increased 5%YoY to 3.2 million bales during the same period.

Other major news flow during the week included: 1) Makkah defence alliance agrees to 'rapid force deployment' in Saudi Arabia, 2) GoP debt posts marginal decline to date, 3) GoP clears nine bidders for Gepco sale, 4) Bahrain working to 'speed up' approval of Pak-GCC free trade pact, and 5) Pakistan, Qatar agree to review LNG deal.

While the laggards were: Vanaspati & Allied Industries, Leasing companies, and Sugar, Textile spinning, Synthetic & Rayon, and Modarabas emerged top performers.

Major selling was recorded by Mutual Funds with US$17.6 million. On the contrary, net buyers were Individuals (US$11.4 million) and Companies (US$6.5 million).

Top performing scrips were: TGL, PSO, BML, AGP, and FCCL, while laggards included: SSOM, PGLC, CPHL, IMAGE, and PSX.

AKD Securities anticipates the market to improve on the back of strengthening economic indicators. Additionally, easing inflationary pressures would reduce probability of monetary tightening. Any positive development on Middle East conflict could moderate international oil prices and serve as a key trigger for market, paving the way for monetary easing.

The market continues to trade at attractive valuations. The top picks of the brokerage house include: OGDC, PPL, UBL, MEBL, HBL, FFC, ENGROH, PSO, LUCK, FCCL, INDU, ILP and SYS.

Oil Supply and Price: What Is the Reality?

For decades, we have been taught a simple economic principle: prices are determined by demand and supply. But crude oil tells a different story. Demand and supply matter, yet they do not, by themselves, determine the price consumers ultimately pay.

I was confronted with this question in 2005 when an anchor of a leading business channel asked me live, what drives crude oil prices? My instant response was, “Crude oil prices are not driven by demand and supply alone; there are other factors which analysts either do not discuss or do not know.” After the program, the anchor remarked, “Kazmi Sahib, your white hairs do not mean people will accept your absurdity.”

Two decades later, the question deserves to be revisited.

Today, Middle Eastern crude exports have recovered to, and on some days exceeded, pre-war levels despite continuing disruption around the Strait of Hormuz. Yet Brent remains above US$100 a barrel. At the same time, Saudi Aramco has cut November crude prices for Asian buyers to a six-year low, while G7 countries have agreed to release 100 million barrels of crude and diesel from emergency reserves.

If supply alone determines price, such developments should have produced a much sharper decline.

The missing piece is the financial market. Crude is priced through highly sophisticated benchmark and futures markets in which fund managers, commodity traders, banks, physical traders and financial institutions constantly buy and sell expectations about future supply, demand and geopolitical risk. Brent futures are cash-settled, meaning positions can be closed financially without physical delivery. Yet those financial markets remain closely connected to physical benchmark pricing.

This creates a powerful feedback loop. Financial-market movements are reported almost hourly by major media houses. Headlines influence expectations; expectations influence trading; trading influences benchmarks; and benchmarks influence the prices paid for physical crude.

The result is that oil producers do not necessarily determine the price of their own product. Saudi Arabia, Russia, the United States and other producers can influence supply, but the marginal price is increasingly shaped by a financial ecosystem of traders, fund managers, benchmark mechanisms and information flows.

That is why the real beneficiaries of oil-price volatility may not always be producers. They can be the financial intermediaries and speculators positioned to profit from every rise and fall.

Perhaps it is time to ask a more fundamental question, who really sets the price of crude oil—the producers who pump it, or the financial markets that trade expectations about it?

Is Gold Losing Its Glitter?

For centuries, gold has been regarded as a store of value, a hedge against inflation and a refuge in times of uncertainty. Yet 2026 has challenged this conventional wisdom. Gold crossed US$5,000 per ounce in January 2026 before retreating sharply. The decline raises an intriguing question, is gold losing some of its traditional glitter?

Several factors may explain this reversal.

First, central banks were major buyers of gold during the global drive to diversify reserves and reduce dependence on the US dollar. Any slowdown in this accumulation could weaken an important source of demand. However, it would be premature to conclude that central banks have stopped accumulating gold.

Second, higher oil prices increase the dollar requirements of oil-importing countries. Governments also need foreign exchange to build strategic reserves and meet external obligations. In such circumstances, liquid dollar reserves may take precedence over additional gold purchases.

Third, geopolitical uncertainty can have an unexpected impact. Gold is traditionally considered a safe haven, but crises also create an urgent need for immediately deployable liquidity. The US dollar, backed by deep and liquid financial markets, can therefore compete directly with gold for safe-haven demand.

Fourth, persistent inflation creates a paradox. Although inflation can support gold as a hedge, rising food, energy and housing costs erode household purchasing power. Families facing higher living expenses may simply have less surplus cash to invest in gold.

Fifth, the increasing availability of bank financing against jewellery may change household behaviour. Instead of selling gold to meet urgent cash requirements, owners can pledge jewellery as collateral while retaining the underlying asset.

Finally, buoyant equity markets can divert investment flows. When stocks and other risk assets promise attractive returns, investors may prefer them to non-yielding gold and gold-backed funds.

None of these factors alone explains the decline. Together, however, they suggest that the investment environment surrounding gold may be changing.

Perhaps gold has not lost its glitter. Perhaps, for the moment, liquidity has become as valuable as a safe haven. The real question is whether this is merely a correction after an extraordinary rally—or the beginning of a structural change in the way investors value gold.

Pakistan and Saudi Arabia: From Brotherhood to a Strategic Partnership

Saudi Arabia’s National Day is an appropriate occasion to reflect on a relationship that has evolved from traditional bonds of faith and friendship into a broader strategic partnership. Pakistan and the Kingdom of Saudi Arabia have maintained close relations for decades, supported by deep people-to-people contacts, economic cooperation and shared security interests. Today, energy, investment and regional diplomacy are adding new dimensions to this enduring relationship.

Saudi Arabia has consistently stood by Pakistan during periods of economic difficulty. In April 2026, Riyadh agreed to provide an additional US$3 billion deposit to Pakistan while extending its existing US$5 billion deposit for a longer period rather than continuing the earlier annual rollover arrangement. The support is important for Pakistan’s foreign-exchange reserves and external financing requirements.

Oil financing has also remained an important element of bilateral economic cooperation. In February 2025, Pakistan and Saudi Arabia signed a US$1.2 billion oil-import financing facility under which payment for petroleum imports could be deferred for one year. The arrangement helped Pakistan secure energy supplies while easing immediate pressure on its foreign-exchange position.

Such support is valuable, but the relationship is increasingly moving towards investment and productive cooperation. This transition is particularly visible in the energy sector.

Pakistan is working with Saudi Arabia, Kuwait and Qatar on a bonded oil-storage scheme under which the Gulf countries would store crude oil and petroleum products in secure facilities in Pakistan at their own cost, with the stocks also potentially serving international markets. The initiative could strengthen Pakistan’s energy security while creating a new commercial and logistical role for the country.

For Pakistan, this opportunity is strategically important. The country remains heavily dependent on imported energy and has historically lacked adequate strategic petroleum reserves. Developing storage capacity for crude and finished products can provide greater protection against international supply disruptions while improving the efficiency of the domestic energy supply chain.

The proposed greenfield refinery represents an even more ambitious opportunity. The project envisages an integrated refinery and petrochemical complex with a minimum crude-processing capacity of 300,000 barrels per day, supported by marine infrastructure, storage, pipelines and related facilities. Saudi Aramco has been associated with the project alongside Pakistani state-owned energy companies.

If implemented successfully, such projects could change the character of Pakistan-Saudi economic relations. Instead of relying primarily on deposits, concessional financing and deferred payments, the two countries can increasingly build a partnership around investment, energy security, industrial production, logistics and trade.

There is another area where Pakistan can make a meaningful contribution - relations between Saudi Arabia and Iran. Pakistan has a unique diplomatic position. It has strategic relations with Saudi Arabia while sharing a border, history and longstanding diplomatic relations with Iran. Islamabad therefore has a natural interest in encouraging communication between Riyadh and Tehran rather than allowing regional rivalries to deepen.

Saudi Arabia and Iran themselves demonstrated in 2023 that dialogue is possible. With China’s facilitation, the two countries agreed to restore diplomatic relations and emphasized respect for sovereignty, non-interference and the peaceful resolution of differences.

Pakistan’s role has become more relevant amid the regional turbulence of 2026. Saudi Arabia publicly welcomed Pakistani mediation efforts in June, while Pakistan has continued to emphasize dialogue and diplomacy. In September, Pakistan’s Foreign Office stated that Islamabad maintains good relations with both Saudi Arabia and Iran and would continue its mediatory role.

Pakistan should build on this position carefully. Its objective should not be to replace established mediators or take responsibility for resolving every regional dispute. Rather, Islamabad can provide a trusted channel for communication, encourage confidence-building measures and facilitate dialogue whenever both sides consider such assistance useful.

Improved Saudi-Iran relations would also serve Pakistan’s interests. Greater stability in the Gulf would reduce risks to energy supplies, maritime trade and regional investment while creating a more favourable environment for economic cooperation.

On Saudi Arabia’s National Day, Pakistan can therefore celebrate more than a historic friendship. The relationship is entering a phase in which financial support remains important, but investment, energy security, industrial cooperation and regional diplomacy can provide its stronger foundations.

For Pakistan, the strategic objective should be to preserve the warmth and trust of its relationship with Saudi Arabia while converting that goodwill into long-term economic cooperation and using its unique position to promote greater regional stability.

Flydubai FZ1073: What Are We Not Being Told?

The more details emerging about flydubai Flight FZ1073, the more questions arise. The UAE prosecutor general has now described the incident as an attempted terrorist attack, saying the co-pilot attacked the captain with a crash axe and attempted to take control of the aircraft. Yet the motive and the full circumstances remain under investigation. I believe investigators must look beyond the immediately available narrative.

Was FZ1073 really an ordinary commercial flight, or was there something unusual about its passengers, identities or cargo?

The first question concerns identities. Were all passengers and crew travelling under their genuine identities? Were passports, immigration records, airline databases and security clearances independently cross-checked? Did any passenger or crew member have a travel history or identity requiring closer scrutiny?

The second question concerns cargo. Was every item loaded on the aircraft properly declared and recorded? Did the physical cargo correspond exactly with the manifest? Were any packages loaded, transferred or handled outside normal procedures?

Then comes the cockpit mystery. Was the co-pilot genuinely the aggressor, as now officially stated, or could the sequence of events have been more complicated? Investigators should reconstruct the confrontation through cockpit voice recordings, flight-data records, access logs, communications, forensic evidence and eyewitness accounts.

The presence of additional pilots aboard the aircraft also deserves careful examination. Their role in bringing the aircraft safely to Tabuk is established, but investigators should establish precisely when and how they became involved.

Most importantly, why have so many conflicting details appeared in the media? Fake videos and contradictory claims have already circulated, prompting fact-checkers to warn about misinformation surrounding the incident.

This is not an attempt to convict anyone through speculation. It is a demand for evidence.

If FZ1073 was simply the victim of a lone insider attack, a transparent investigation should establish that beyond doubt.

But if identities were concealed, cargo was undeclared, or the cockpit incident was merely one part of a larger plan, investigators must uncover it.

The real story will emerge only when every passenger, every piece of cargo and every minute of the flight is accounted for.

Why Should G7 Bail Out Donald Trump?

Why should the Group of Seven bail out Donald Trump from an energy crisis aggravated by the war with Iran and disruption of energy flows through the Strait of Hormuz?

The question becomes even more relevant after G7 countries agreed to release up to 100 million barrels of diesel, crude oil and other petroleum products from emergency reserves over four months, with a substantial volume of diesel to be released within the first 20 days.

The decision followed intense pressure from Washington, including the threat of a US diesel-export ban that could have further disrupted supplies to Europe.

The irony is difficult to ignore. Trump had repeatedly indicated that a diesel-export ban was under consideration. After European countries agreed to release their strategic stocks, he declared that the United States would not impose such a ban—and claimed that it had never really been on the table.

If that is the case, why were America's allies required to open their emergency reserves?

Strategic petroleum reserves are maintained for genuine emergencies. They should not become an instrument for managing the consequences of another country's policies. Releasing 100 million barrels may provide temporary relief, but it cannot substitute for restoring normal energy flows.

The larger question is therefore unavoidable, why is Washington concentrating on extracting more fuel from its allies instead of addressing the causes of the disruption?

The Strait of Hormuz is vital to the global energy system. Prolonged disruption affects far more than Iran. Higher crude and refined-product prices feed directly into transportation, agriculture, manufacturing, inflation and household costs across the world.

Trump may describe the G7 release as a “major world contribution.” But the world needs more than emergency barrels. It needs secure shipping routes, uninterrupted energy supplies and a diplomatic framework capable of ending the confrontation.

Punishing Iran through sanctions and military pressure while asking the rest of the world to absorb the resulting energy shock is hardly a sustainable strategy.

If Washington wants its allies to share the burden of the crisis, it should also be prepared to share responsibility for ending it. Otherwise, the G7 may simply be helping Trump postpone a problem that requires a political solution.

PSX benchmark index down 1.5%WoW

Pakistan Stock Exchange (PSX) remained under pressure during the week ended on Friday, October 02, 2026, as renewed uncertainty over the US-Iran conflict and elevated global energy prices continued to weigh on investor sentiment. The benchmark index witnessed erosion of 2,610 points or 1.5%WoW to close at 168,155.

Oil prices remained elevated for most of the week, touching US$105.3/ bbl, as supply chain concerns and China's suspension of oil product exports outweighed recovering Gulf crude flows.

Brent crude declined to US$99.5/ bbl in the concluding phase of the week amid growing pressure of the US on Europe to release diesel stocks.

September 2026 inflation was recorded at 10.3% as against 11.2% in August 2026 due to disinflationary pressure from food prices.

Trade deficit for September 2026 widened by 6%YoY to US$3.6 billion.

IMF mission formally began policy talks in Islamabad on the fourth EFF review and third RSF review, likely to result in the release of US$1.2 billion in combined disbursements.

FBR collected PKR3.1 trillion in 1QFY27, exceeding the IMF-agreed target by PKR13 billion.

State Bank of Pakistan (SBP) raised PKR853 billion via the T-Bills auction. The cutoff yields increased for all the tenors.

Other major news flow during the week included: 1) Finance Minister discussed potential US Export-Import Bank financing for Boeing aircraft, refinery upgrades and Reko Diq, 2) foreign exchange reserves held by SBP were reported at US$21.4 billion as of September 25, 2026, 3) SBP's net FX interventions were reported at US$841 million in June 2026, 4) GoP raised PKR46 billion and PKR72 billion in fixed/ variable Hybrid Sukuk auction, and 5) Gop plans to procure at least 25-26 LNG cargoes to meet winter gas demand.

Leading contributors were Vanaspati and Allied Industries, Synthetic and Rayon, and Modarabas, while sectors that lagged the most were Power, Inv. Cos., and Paper and Board.

Major buyers were Companies (US$5.2 million) and Individuals (US$4.5 million). On the contrary, major net selling was recorded by Mutual funds (US$6.1 million) and Brokers worthUS$2.3 million, respectively.

Top performing scrips were: SSOM, ii) BML, and ATRL, while laggards included: PSEL, FHAM, and NPL.

AKD Securities expects the market to improve on the back of strengthening economic indicators, with the upcoming IMF review to remain a key near-term catalyst.

A potential US-Iran deal could moderate international oil prices from current elevated levels. The market continues to trade at attractive valuations.

According to AKD Securities, the 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.

 

 

Four vessels struck in Hormuz in 24 hours

According to Seatrade Maritime News, UKMTO has published four warnings of attacks in the Strait of Hormuz which took place on September 28 and 29.

The first of the late reports states that a vessel was struck by an unknown projectile late on September 28, leading to a fire onboard, which was later extinguished. The crew were reported as safe. The IMO’s list of confirmed attacks in the region now carries a September 28 incident involving VLCC Al Funtas in the Strait of Hormuz, reporting damage to the ship and no pollution. The ship is owned and operated by Kuwait Oil Tanker Company.

The UKMTO report was filed as suspicious activity, rather than an attack, even though it confirms an attack on the ship.

On September 30, three more late reports were published regarding incidents that took place on September 29. The first report is of a crude oil tanker struck on the port side, identified by Vanguard Tech as 2008-built VLCC Mersin Prosperity. According to Equasis data, the ship is managed by ADNOC.

The second report is of a tanker transiting inbound being struck by an unknown projectile, identified by Vanguard as Sinbad, a Liberian-flagged tanker managed by Anglo-Eastern.

The third report of a tanker struck by an unknown projectile regards Al Ruwais, according to Vanguard, which it identified as an LNG tanker, although the vessel appears to be a Liberia-flagged LR2 owned and operated by ADNOC.

All of the attacks were within the Strait of Hormuz.

Of the three ships identified by Vanguard, only Sinbad appears on Iran’s list of non-compliant vessels it claims have breached Tehran’s rules for transiting the Strait of Hormuz. Vessels on the list, administered by the Persian Gulf Strait Authority (PGSA), are subject to fines, detention, or confiscation during future passages of the Strait of Hormuz, PGSA has warned.

“The extent of damage to the three vessels remains unclear at current,” said Vanguard.

The series of late reports from UKMTO is unusual, and follows Iranian claims to have attacked 19 vessels on September 25 and 26. UKMTO relies on a voluntary reporting scheme and acts as a point of contact for emergency response in the region, and so its reporting capability would be limited should vessels and organizations choose not to report incidents.

 

US Forces Exit Iraq After Two Decades

Is the US exiting Iraq by choice—or under pressure?

I am not surprised by the announcement that US forces are leaving Iraq. The withdrawal was agreed in 2024 under President Joe Biden and is now being implemented by Donald Trump’s administration. Yet the timing is intriguing - America is leaving Iraq while simultaneously confronting Iran in a widening regional conflict.

The obvious interpretation is that Washington has concluded that its military mission in Iraq has run its course. But geopolitics rarely ends with the departure of troops. America may be leaving Iraq militarily without necessarily leaving the Iraqi theatre strategically.

The withdrawal removes a long-standing American military presence that acted as a counterweight to Iran's influence. Iran and its allies are already celebrating the departure as a victory, while some Iraqi officials fear that the resulting security gap could strengthen Iran-backed militias. At the same time, Islamic State sleeper cells remain active, creating another potential source of instability.

This raises a more provocative question; could the withdrawal ultimately facilitate another phase of the US-Iran confrontation rather than bring it to an end?

There is no evidence that Washington intends to use Islamic State as a proxy. Yet the possibility deserves consideration. Iraqi commanders have reported increased movement by sleeper cells following news of the withdrawal, while the loss of American intelligence, drones and logistical support could give the group greater operating space.

A security vacuum, if it develops, could provide militants with an opportunity to revive—and governments with a pretext for renewed intervention.

Iraq's oil resources add another strategic dimension. Any prolonged instability affecting exploration, production or export infrastructure would have consequences far beyond Iraq. Whether such an outcome is intended or simply emerges from a deteriorating security environment remains an open question.

Therefore, America's departure should not automatically be interpreted as the end of its Iraqi engagement. Troops may be leaving, but American strategic interests are unlikely to disappear with them.

The real question begins after September 30, will Iraq finally exercise greater sovereignty, or will the vacuum created by the withdrawal become the opening chapter of another US-Iran proxy confrontation?

The Syndicate That Brought Trump Is Losing Patience

Donald Trump returned to the White House with the support of a broad coalition of political, business, media, energy, technology and investment interests. Many expected his second presidency to deliver decisive results. Nearly two years later, some members of this coalition may be confronting a widening gap between expectations and reality.

Iran is perhaps the clearest example. The US-Israeli war on Iran, which began on February 28, has entered its seventh month, yet Tehran has not surrendered. Iran has endured sustained military pressure while retaining significant leverage, particularly through the Strait of Hormuz. Diplomatic efforts are continuing, but Washington and Tehran remain far apart.

The economic consequences are becoming increasingly difficult to ignore. US diesel prices have climbed above US$6 per gallon, while concerns over shortages are intensifying. Trump has considered restricting diesel exports, but the oil industry has resisted, warning that such a move could disrupt refinery operations and ultimately worsen supplies.

The oil market presents another uncomfortable reality. Brent crude has moved above US$100 per barrel, but the much-discussed US$200 target remains elusive. More significantly, the spread between Brent and West Texas Intermediate has widened, reflecting a market increasingly distorted by geopolitical risk rather than controlled by policy.

The media was among the first constituencies to become increasingly critical. Energy companies are now showing greater resistance, while investors are becoming more selective about technology and AI valuations. The military-industrial complex, meanwhile, continues to receive substantial attention, but the prolonged conflict raises questions about the sustainability and strategic payoff of escalating military expenditure.

This growing friction also has a political dimension. A fresh impeachment resolution was tabled in the House on September 15 by 232–147, with 47 members voting present. It therefore did not proceed to a Senate trial. Yet another attempt cannot be ruled out, particularly if political control of Congress changes.

The larger question is whether the diverse interests that helped bring Trump back to power can remain united when geopolitical ambitions collide with energy prices, corporate interests, financial markets and domestic political pressures.

“The Syndicate” may never have been a formal organization. It was a convergence of interests. The real test now is whether that convergence can survive the widening gap between expectations and results.

PSX closes the week almost flat

Pakistan Stock Exchange (PSX) remained volatile during the week ended on September 25, 2026. The benchmark Index gained 372 points or 0.22%WoW to close the week at 170,885 points.

Yemeni Houthi attacks on Saudi Arabia's East-West Pipeline forced the closure of a key export route, pushing Brent crude to a 4-month high of US$109.7/bbl. However, oil prices eased during the final two days.

The index recovered on fading concerns over immediate Saudi supply disruptions, outweighing fears of a broader Middle East conflict.

The State Bank of Pakistan (SBP) kept the policy rate unchanged at 11.50% on Monday, in line with broad market consensus.

The current account deficit narrowed sharply by 70%YoY to US$98 million in August 2926.

Foreign exchange reserves held by SBP hit a record high of US$21.4 billion, pushing the country's import cover past three months for the first time in 5-Years.

Furthermore, yields on 3 and 6-month T-Bills declined in the last auction.

FDI increased by 80%YoY to US$316 billion during August 2026.

Auto industry sales increased by 11%YoY to 17,485 units in August 2026.

IT exports rose 17%YoY to US$394 million.

Other major news flow during the week included: 1) GoP presents IMF plan to retire PkR3.6tn gas-sector circular debt, 2) Pakistan eyes to seek an expansion of its 30-billion-yuan swap line with China, 3) Pakistan cotton arrivals rises by 19%YoY to 2.4 million bales as of September 3026, 4) Auto financing in August 2026 reached record high of PKR393 billion, and 5) GoP approves PKR75 billion subsidy for fuel relief scheme.

Leading sectors were: Synthetic and Rayon, Leasing Companies, and Real Estate Investment Trust, while laggards included: Textile Weaving, Paper and Board, and Leathers and Tanneries.

Major buyers were Individuals (US$11.0 million) and Banks (US$2.6 million). On the contrary, major selling was recorded by Mutual Funds (US$12.7 million) and Foreigners (US$3.4 million).

Top performing scrips were: PSEL, IBFL, and CPHL. On the other side, laggards included: GHNI, GAL, and NBP.

Pakistan’s leading brokerage house, AKD Securities expects the market to improve on the back of strengthening economic indicators, with the upcoming IMF review in the next week to remain a key near-term catalyst. A potential US-Iran deal could moderate international oil prices from current elevated levels.

The market continues to trade at attractive valuations. The brokerage house forecasts the benchmark Index to reach 263,800 by end December 2026.

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