PSX benchmark index up 4%WoW

Pakistan Stock Exchange (PSX) witnessed positive momentum during the week ended on June 18, 2026, driven by a promising US-Iran deal causing oil prices to fall below US$80/ bbl, a 3-month low, alongside a favorable budget for most sectors including Cement, Steel, Refineries, Textile, Pharma and Tech, coupled with reduction/ elimination of super tax for individuals and corporates. The sentiments were further supported by a status quo by the central bank in its Monetary Policy Committee (MPC) meeting on Tuesday. However, the postponement of commencement of technical talks between US and Iran during Friday’s early hours slightly tempered the momentum on the final day, despite an overall positive week. The benchmark Index gained 6,523 points or 4%WoW, to close the week at 178,923 points. Market participation improved considerably, with average daily trading volume increasing by 53%WoW to 1.4 billion shares, as against 900 million shares in the prior week.

On the macroeconomic front, Current Account showed a surplus of US$459 million in May 2026, as against a deficit of US$44 million in same period last year.

IT exports rose 13%YoY to US$373 million during the same month.

Yields in the first PIB auction following the recent MPC declined by to 12.14%, 12.09%, 12.19%, and 12.61% for 2, 3, 5 and 10 year tenors, respectively.

LSM index rose 6.4%YoY in 10MFY26.

Urea offtakes remained flat YoY at 419,000 tons in May 2026 and DAP sales fell 36%YoY due to higher prices.

Other major news flow during the week included: 1) oil and gas shipments through Strait of Hurmuz commenced after signing of MOU between United States and Iran, 2) foreign exchange reserves held by SBP rose to US$17.2 billion as of June 12, 2026, 3) Power generation declined 1% in May, 4) Power sector circular debt rose to PKR1.9 trillion in 10MFY26, and 5) Textile exports rose 2%YoY to US$16.7 billion in 11MFY26.

Top performing sectors were: Vanaspati & Allied Industries, Transport, and Jute, while laggards included: Property, Woolen, and Sugar & Allied Industries

Major buying was recorded by Mutual Funds of US$63.4 million. Major selling was recorded by Insurance amounting to US$59.7 million.

Top performing scrips were: SSOM, PSX, SNGP, SSGC, and FATIMA, while laggards included: JVDC, HCAR, TRG, BNWM, and ATLH.

According to AKD Securities, compliance of peace deal along with positive outcomes of technical talks between US and Iran, followed by favorable financial results for the period ended June 30, 2026, will support market sentiment in the near term.

Market continues to trade at attractive valuations.

The brokerage forecast 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.

Strategic Triumph or Political Narrative

Iran’s decision to declare victory after signing a memorandum of understanding (MOU) with the Trump administration has triggered a new debate, is Tehran celebrating a genuine strategic achievement, or is it shaping a political narrative for domestic and regional audiences?

From Iran’s perspective, there are clear reasons for confidence. The agreement ends a damaging confrontation, reopens the Strait of Hormuz, removes immediate military pressure and creates the possibility of relief from restrictions on its oil and banking sectors. Most importantly, Tehran has avoided the outcome many feared, a forced political collapse or a decisive military defeat. In international politics, preserving national sovereignty under extreme pressure is often considered an achievement.

Iran can also argue that Washington’s decision to negotiate represents recognition that maximum pressure and military action alone could not achieve all American objectives. A return to diplomacy suggests that both sides eventually accepted the limits of coercion.

However, the declaration of victory may be premature. The MOU is not a final settlement but the beginning of a difficult negotiating process, particularly regarding Iran’s nuclear program and broader regional issues. The durability of Iran’s gains will depend on implementation, economic recovery and whether future disagreements lead to renewed confrontation.

The reaction inside Iran also reflects a more complex picture. Supporters of the government view the agreement as evidence of resistance and national strength. Hard-line groups, however, argue that Iran had greater leverage and should have demanded more concessions. Meanwhile, ordinary citizens appear focused less on political symbolism and more on whether the agreement improves daily economic conditions and reduces uncertainty.

The United States also faces a complicated outcome. Washington retains influence through diplomacy, sanctions mechanisms and future negotiations, but it cannot claim a complete victory when military pressure ultimately led back to the negotiating table.

The reality is that neither side achieved all of its objectives. Iran gained survival, diplomatic space and potential economic relief, while the United States achieved a pause in escalation and a framework for further negotiations.

The MOU should therefore not be viewed simply as an Iranian victory or an American defeat. It represents a temporary balance of power where both sides accepted that confrontation had limits.

History will judge this agreement not by the celebrations that followed its signing, but by whether it produces lasting stability, economic improvement and a sustainable solution to one of the world’s most dangerous geopolitical disputes.

Ceasefire Ambition and Strategic Ambiguity

The reported 14-point memorandum of understanding on ending the Iran conflict, as cited by The Hill and attributed to Bloomberg and CNN sources, presents a sweeping and highly consequential framework. Yet, rather than signalling a settled peace architecture, it raises fundamental questions about legitimacy, sequencing, and strategic intent.

According to the reported text, the United States and Israel initiated military action while negotiations were still ongoing, without prior consultation of the United Nations Security Council or clear congressional authorization. This sequencing alone casts doubt on the institutional grounding of the process, especially when such a far-reaching agreement is now expected to carry binding implications.

The proposed structure appears heavily front-loaded with political assurances but back-loaded with enforceable obligations. A key example is the creation of a US$300 billion reconstruction fund for Iran, reportedly to be financed by the United States “together with its regional partners.” This raises a critical equity question: why should regional actors shoulder reconstruction costs while the responsibility for conflict escalation remains contested?

Equally contentious is the ambiguity surrounding sanctions. While the draft suggests a commitment to lifting “all types of sanctions,” it simultaneously defers implementation to a final agreement, leaving Iran’s economic reintegration uncertain and conditional. The immediate easing of oil export restrictions and unfreezing of Iranian assets further complicates the sequencing, effectively front-loading economic relief before verifiable political concessions.

On the nuclear dimension, the agreement reportedly reiterates Iran’s commitment not to develop nuclear weapons, while maintaining the “status quo” of its enrichment program. However, without explicit, time-bound constraints or robust verification mechanisms involving neutral actors, such as additional oversight by the United Nations Security Council, the arrangement risks replicating past cycles of mistrust.

President Trump’s assertion that the memorandum is “not final” and his warning of renewed bombing if Iran does not “behave” further underscore the fragility of the arrangement. Diplomacy framed by conditional coercion may secure short-term de-escalation, but it leaves long-term stability unresolved.

Ultimately, the reported MOU reflects less a conclusive peace settlement and more an evolving geopolitical bargaining framework—one that demands closer scrutiny of sequencing, burden-sharing, and institutional legitimacy before it can credibly translate into lasting regional stability.

Safe Departure of Stranded Crew

Both the International Chamber of Shipping (ICS) and the International Maritime Organization (IMO) welcomed news of the US-Iran peace deal and the expected re-opening of the Strait of Hormuz.

The closure of the key waterway to all but a trickle of traffic since February 28, has left around 1,000 ships and 20,000 crew stranded in the Arabian Gulf.

“This announcement comes as a relief to the 20,000 seafarers who have been caught in the middle of this war. Their safe departure from the region must be a top priority but will take time,” said ICS Secretary General Thomas Kazakos.

The ICS is looking to the IMO to help facilitate this process. “With around 500 ships needing to pass through the Strait to exit the area this will require coordination.  The International Maritime Organization has a crucial role, working alongside industry and states in the region, to ensure this is done as safely and as quickly as possible,” Kazakos said.

In a separate statement IMO Secretary-General Arsenio Dominguez, said, “The agreement also allows IMO to advance its plan to evacuate the thousands of seafarers stranded in the area. The Organization is working in close collaboration with Member States and partners to implement this plan safely and effectively. However, its implementation will require time to ensure that all necessary safety and security guarantees are in place.”

Details of the re-opening of the Strait and when it will happen remain unclear although it is expected after the signing of the peace deal between US and Iran on 19 June.

Both ICS and IMO stressed the need for a return to freedom of navigation in the Strait of Hormuz and paid tribute to innocent seafarers who lost their lives in the conflict.

“This signals a crucial return to peace, dialogue, multilateralism and diplomacy, and in particular, an important step toward restoring safety in this vital maritime corridor for seafarers and ships, as well as safeguarding the fundamental principle of freedom of navigation,” IMO said.

Kazakos from ICS stated, “The fundamental principle of freedom of navigation has been sidelined during the war, and many seafarers have regrettably been injured or lost their lives. As we now hopefully move towards peace, we must see a permanent return to vessels being able to pass through the Strait of Hormuz unimpeded without paying a toll or other clearance mechanism.” 

IMO Secretary-General Dominguez has repeatedly highlighted the plight of seafarers caught in the conflict and the unacceptable targeting of commercial shipping. The IMO said the Secretary-General expressed his deepest sympathies for all victims of the conflict, and paid particular tribute to the innocent seafarers affected and to their families. 

Courtesy: Seatrade Maritime News

 

Growing Credibility Gap in US Foreign Policy

The conflicting statements emerging from Washington regarding a possible agreement with Iran have generated more confusion than confidence. President Donald Trump appears to alter his position with remarkable frequency, while sections of the Western media continue to interpret every statement as evidence of an imminent breakthrough. Yet the fundamental reality remains unchanged - any sustainable agreement with Iran cannot be imposed solely on American terms.

For decades, the United States has relied on a combination of sanctions, diplomatic pressure, and military leverage to influence Iranian behavior. However, recent developments suggest that these tools have yielded diminishing returns. Despite facing severe economic restrictions and international isolation efforts, Iran has demonstrated resilience and retained its ability to influence regional dynamics. Whether the West acknowledges it or not, Tehran today remains a significant geopolitical actor whose interests cannot simply be ignored.

This reality has exposed a growing credibility gap in US foreign policy. Repeated shifts in messaging have made it increasingly difficult for allies and adversaries alike to distinguish between strategic objectives and political rhetoric. When policy signals change rapidly, uncertainty becomes the dominant feature of international relations.

The consequences extend beyond the Iran question. Energy markets remain vulnerable to geopolitical tensions, yet major oil-exporting countries appear unable to persuade Washington to adopt policies that would facilitate smoother and more predictable crude oil flows. The result has been prolonged uncertainty for both producers and consumers.

At the same time, Washington's broader strategic objectives appear increasingly difficult to reconcile. The United States has sought to contain Iran, restrict China's access to reliable energy supplies, reassure its allies, and maintain pressure on geopolitical competitors—all while preserving stability in global markets. Such ambitions may be understandable, but pursuing multiple objectives simultaneously often produces unintended consequences.

Questions are also being raised about the effectiveness of traditional Western alliances. America's partners continue to depend on Washington's leadership, yet many are increasingly concerned about policy unpredictability and the absence of a coherent long-term strategy. This uncertainty has encouraged countries across Asia, the Middle East, and elsewhere to diversify their diplomatic and economic partnerships.

Perhaps the most striking outcome is visible in global energy markets. Despite recurring geopolitical crises and heightened tensions, crude oil prices have struggled to sustain significant gains. This suggests that markets are increasingly influenced by structural economic factors rather than political narratives alone.

The lesson is straightforward. Credibility remains one of the most valuable assets in international diplomacy. Military strength and economic power matter, but they are most effective when supported by consistency and strategic clarity. As long as Washington continues to send mixed signals on critical issues such as Iran, the credibility gap in US foreign policy is likely to widen, with consequences extending far beyond the Middle East.

Iran War Unlikely to End on US Terms

The longer the conflict with Iran drags on, the more difficult it becomes to accept Washington's claim that it genuinely seeks peace. Months after the ceasefire announcement, the region continues to witness periodic escalation, suggesting that the United States and Israel are still pursuing objectives that remain unfulfilled.

If the war were truly about eliminating an immediate threat, it should have ended by now. Instead, the persistence of tensions indicates that broader geopolitical ambitions remain at play.

First, despite years of sanctions, diplomatic isolation, and military pressure, Iran's status as a regional power remains largely intact. Far from being marginalized, Tehran continues to exert influence across the Middle East. This outcome falls well short of what United States and Israel had hoped to achieve.

Second, the US has failed in securing a major diplomatic breakthrough by bringing Saudi Arabia fully into the Abraham Accords framework. The ongoing conflict has made such an objective increasingly difficult, exposing the limitations of American diplomacy in the region.

Third, expectations of regime change in Tehran have once again proven unrealistic. Iranian institutions remain functional, and the leadership has survived a campaign designed to weaken its authority and legitimacy.

Fourth, despite repeated military operations, neither Iran's nuclear capabilities nor its missile program appears to have been decisively neutralized. The enormous costs incurred have not delivered the strategic victory that was promised.

Meanwhile, Israel has also struggled to achieve one of its key security objectives: the complete elimination of Hezbollah's military and political influence in Lebanon. The group's continued presence remains a source of concern for Israeli policymakers.

These shortcomings help explain why pressure persists against any settlement that does not fully satisfy American and Israeli demands. Iran is expected to make concessions, yet there is little willingness to discuss lifting decades-old sanctions or compensating Tehran for infrastructure damaged during the conflict.

The reality is becoming increasingly difficult to ignore. The war continues because its principal architects have not achieved their desired outcomes. Until Washington and Tel Aviv recognize the limits of military coercion and accept a genuinely negotiated settlement, the ceasefire will remain little more than a pause in a conflict that neither side has truly left behind.

War, Fear and Israeli Ballot

As Israelis prepare to vote while military operations continue against Iran and tensions remain high on multiple fronts, the election is being viewed through a simple question: will voters reward or punish Prime Minister Benjamin Netanyahu for choosing confrontation over restraint? Several outcomes are conceivable.

One possibility is that Netanyahu's coalition suffers setbacks because many Israelis have grown weary of living under a constant state of emergency. Years of conflict have imposed economic, social and psychological costs. Critics argue that military victories, however significant, have not produced lasting peace. Voters seeking stability may therefore conclude that a different political course is needed.

A second scenario is that Netanyahu emerges stronger. His supporters will contend that Israel has seized a historic opportunity to weaken what it regards as its most formidable adversary. If military operations are widely perceived as successful, many voters may see little reason to replace the leadership that authorized them. In times of conflict, electorates often prioritize continuity over change.

A third possibility is that Netanyahu benefits from his image as the guardian of Israeli security. Elections held during periods of heightened tensions are rarely fought on economic performance alone. Security concerns tend to dominate public discourse, and leaders who project determination frequently gain political advantage. For many voters, the question may not be whether they approve of every government decision, but whether they trust any alternative leadership to manage the threats facing the country.

A fourth scenario is that the electorate embraces candidates advocating de-escalation and diplomacy. Such an outcome would signal a growing belief that military power, while necessary for defense, cannot by itself resolve Israel's long-term security challenges.

Yet the balance of probabilities appears to favor Netanyahu. The election is taking place in an environment where security concerns overshadow almost every other issue. Moreover, significant political, security and ideological constituencies remain committed to a strategy of confronting and weakening Israel's adversaries before pursuing broader regional accommodation.

The decisive factor may not be Netanyahu himself. Rather, it is whether Israeli society continues to believe that greater security can be achieved through military dominance. If that belief remains intact, Netanyahu's path to victory becomes considerably easier. The election, therefore, may be less a verdict on one leader than a reflection of a broader national mood shaped by fear, conflict and the enduring quest for security.

Sovereignty, Security and Selective Silence

Saudi Arabia's condemnation of Iranian attacks on Kuwait and Bahrain is understandable. Any attack against a neighboring Gulf state threatens regional stability and raises legitimate concerns about security. Riyadh's warning that such actions could push the region toward greater instability reflects the anxieties of governments and citizens alike.

Yet the latest crisis exposes a deeper question that deserves serious debate across the Gulf.

The Kingdom and its GCC partners have been swift in condemning Iranian military actions. However, they have been far more restrained when it comes to criticizing US attacks on Iran, many of which originate from military facilities located within GCC countries. This raises an uncomfortable but important question. Is sovereignty being defended as a universal principle, or is it being interpreted through the lens of strategic alliances?

The issue is not whether Iran should be held accountable for actions that threaten regional peace. It should. The real issue is whether the same standards are applied consistently to all actors.

For decades, Gulf states have justified hosting US military bases as a necessary component of their security architecture. The arrangement has undoubtedly provided strategic protection. However, it has also created a paradox. Facilities intended to enhance security may simultaneously transform host nations into potential targets whenever confrontation erupts between Washington and its adversaries.

This dilemma goes beyond the Gulf. It touches the very meaning of sovereignty in the modern world. Sovereignty is not merely the defense of territorial borders; it is also the ability to exercise independent control over how national territory is used. If military operations against a third country are launched from bases located within a sovereign state, can that state genuinely claim neutrality in the resulting conflict?

Supporters of the current security framework argue that these operations occur with the consent of host governments and therefore do not violate sovereignty. Critics counter that consent alone does not eliminate responsibility for the consequences that follow.

The Gulf's leaders frequently call for dialogue, restraint and de-escalation. These are worthy objectives. Yet lasting credibility requires a consistent approach. Condemning attacks from adversaries while remaining silent about military actions conducted by allies inevitably invites questions about selective outrage.

The debate, therefore, is not about choosing between Washington and Tehran. It is about determining whether sovereignty is a principle to be upheld universally or a concept applied selectively when political convenience demands it.

Trading at PSX driven by US-Iran conflict

The benchmark Index of Pakistan Stock Exchange (PSX) continued its positive momentum in May 2026 for the second consecutive month as the US and Iran moved closer to clinching a deal. The absence of additional revenue measures in the upcoming budget, amid the uncertainty created by the recent US-Iran conflict boosted investors’ confidence. Technology, Cement, and OMC sectors delivered the strongest positive returns while refineries remained negative during the month under review.

The Index continued its positive momentum for the second consecutive month as the US and Iran moved closer to clinching a deal that could pave the way for the reopening of the Strait of Hormuz. Consequently, the Index gained 6.7% (6.8% in US$ terms) during May. However, market liquidity contracted by 20.6% on sequential basis as average daily traded volume declined to 929 million shares from 1,170 million shares in April 2026 due to Eid effect. Average daily traded value also dropped by 22.2% to PKR41.8 billion (US$150 million) from PKR53.7 billion (US$192.7 million) in April 2026.

The absence of additional revenue measures in the upcoming budget, amid the uncertainty created by the recent US-Iran conflict boosted investor confidence. Analysts expect the government's focus to remain on increasing revenue through enforcement measures while curtailing expenditures, which would continue to be the mainstay of its fiscal strategy.

Pakistan’s role as a mediator in the ongoing US-Iran conflict supports the view that the country’s increasing importance in the GCC is likely to improve its global standing and help attract foreign investment. However, any adverse development in the US-Iran conflict could become a source of concern for investors.

Technology, Cement, and OMC sectors delivered the strongest positive returns, driven by improving IT exports, continued robust domestic demand, and higher inventory gains. The Technology sector posted a return of 15.6% in May, followed by OMCs and Cement, which generated returns of 10.7% and 10.0% respectively. The Fertilizer sector also reported a strong return of 8.8%, supported by healthy offtakes and attractive dividend yields. As against this, Refineries sector posted a negative return of 1.2% during the month following the government's decision to fix margins on certain petroleum products to provide relief to consumers.

Insurance and Brokers remained net buyers in May, accumulating equities worth US$12.8 million and US$5.5 million, respectively, amid expectations of a US-Iran deal. Conversely, Companies, Banks, and Mutual funds remained net sellers as funds shifted toward fixed-income securities following policy rate increase by the central bank in April 2026. Foreign investors also remained net sellers due to geopolitical tensions and rising concerns over currency depreciation across emerging and frontier markets amid inflationary pressures in developed economies resulting from the Middle East conflict. Net foreign selling was recorded at US$17.2 million, primarily in the banking sector (US$14.1 million), followed by the cement sector (US$5.4 million).

 

PSX benchmark index down 2.0%WoW

Pakistan Stock Exchange (PSX) remained volatile during the week ended on June 05, 2026, due to the evolving US-Iran negotiations and movements in international oil prices. The benchmark Index was down 3,484 points or 2.0%WoW to close at 170,479 on Friday.

Investor sentiment weakened at the start of week on the news of probable halt in US-Iran talks after Israel attacked Lebanon, and inflation came in above policy rate at 11.7%YoY, taking real interest rates into positive territory after 26 months. Brent crude was up 5.9%WoW to US$98.9/ bbl.

On the macroeconomic front, Pakistan's trade deficit for May 2026 decreased by 14%YoY and 39%MoM to US$2.6 billion, led by 6.6%YoY and 21%MoM decrease in imports.

FBR's provisional tax collection for 11MFY26 was reported at PKR11.2 trillion, reflecting a shortfall of PKR25 billion against the revised target.

Foreign exchange reserves of State Bank of Pakistan (SBP) increased to US$17.2 billion as of May 29.

Cement dispatches for May 2026 declined by 21%YoY to 3.8 million tons, mainly due to Eid holidays amid higher fuel prices

OMC offtakes declined by 23%YoY to 1.17 million tons during the month, led by lower HSD offtakes.

Other major news flow during the week included: 1) GoP announced PKR290/ US$ exchange rate for the FY27 budget, alongside a GDP growth of 4% and inflation, 2) Pakistan secured three Qatari and one spot LNG cargo, 3) FCC questioned Punjab's royalty levy on cement, 4) OGDC made an oil and gas discovery at Bobi Deep-1, and 5) NEPRA approved a PKR1.99/unit relief.

Top performing sectors were: Synthetic & Rayon, and Modarabas, while laggards included: Power Generation, Oil & Gas Exploration, and Vanaspati & Allied Industries.

Major selling was recorded by Mutual Funds of US$19.5 million, while buying was recorded by Individuals of US$16.5 million. Top performing scrips were: HCAR, PSX, GHNI, IBFL, and PGLC, while laggards included: GHGL, NBP, APL, ENGROH, and PKGS.

According to AKD Securities a constructive resolution to the US-Iran conflict, alongside the trajectory of international oil prices, would remain the pivotal near-term catalysts for market direction.

The upcoming FY27 federal budget, scheduled for June 10, would remain a key focus for the market. 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.

When Rules Apply Only to Adversaries

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

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

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

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

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

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

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

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

PSX benchmark index up 6.7%MoM

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

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

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

Ceasefire Diplomacy or Managed Conflict?

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

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

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

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

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

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

Oman: Next Phase of Washington’s Strategy

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

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

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

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

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

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

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

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

Pushing Iran to Edge a Dangerous Gamble

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

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

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

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

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

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

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

Crucial week ahead for tanker market

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

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

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

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

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

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

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

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

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

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

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

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

Courtesy: Seatrade Maritime New

 

Trump’s Mirage of Iranian Surrender

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

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

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

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

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

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

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

Washington Must Admit Defeat in Iran

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

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

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

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

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

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

PSX benchmark index up 1.4%WoW

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

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

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

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

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

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

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

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

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

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

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

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

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

 

Why US-Iran Ceasefire is a Dangerous Farce

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

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

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

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

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

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

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