In the eye of a perfect storm

Pakistan’s geographic proximity and brotherly relationship with Iran and the Gulf Cooperation Council states, combined with its attempt to balance relations with both China and the United States, have pushed it to the centre of the geopolitical turbulence triggered by the war unleashed on Iran by the United States and Israel; one might say the country is, metaphorically, in the eye of a perfect storm.

The crisis erupted at a moment when global policymakers were already warning about rising geopolitical risks. When political and corporate leaders gathered at the World Economic Forum in Davos earlier this year, they identified four forces likely to shape the next decade of global growth: geopolitics, energy transition, artificial intelligence (AI) and climate change.

The US–Israel war with Iran has abruptly transformed that framework from a theoretical forecast into an immediate economic reality. For years, geopolitics was treated as secondary to the efficiencies of globalisation; that era is rapidly ending. This confrontation has reintroduced a tangible risk premium across financial markets, energy supply chains and global capital flows.

Three Gulf countries — Saudi Arabia, the United Arab Emirates (UAE) and Qatar — have reportedly begun reviewing their national budgets and overseas investment strategies following Washington’s decision to proceed with military action despite repeated regional warnings. According to media speculations, policymakers in the Gulf are examining proposals that could reduce exposure to the US and reassess major investment commitments across several international markets.

As the conflict-ridden global front carries on, Pakistan grapples with its first wave of supply disruptions as domestic oil prices rise by Rs55 per liter

As the conflict-ridden global front carries on, Pakistan grapples with its first wave of supply disruptions as domestic oil prices rise by Rs55 per liter

Energy policy is emerging as an even more powerful pressure point. Qatar, one of the world’s largest exporters of liquefied natural gas (LNG), is reported to have halted gas production in certain operations, highlighting the seriousness of the unfolding crisis. Any sustained disruption in Gulf energy supplies would inject significant volatility into global markets and place additional strain on already fragile........

© Dawn Business