The financial sector expects oil prices to remain between $90 and $100 per barrel during the remaining days of September and in October.

However, the situation has once again changed after US President Donald Trump announced on Saturday that he had rejected Iran’s proposal for the Gulf war. Iran is now anticipating possible attacks from the US, raising concerns that oil prices could surge.

Analysts expect oil prices to remain around $100 per barrel if the war resumes. However, much will depend on the availability of oil supplies in the international market. Pakistan imports 70pc of its oil and gas requirements, making inflation highly sensitive to oil prices.

Stakeholders believe oil prices to hover around $100 per barrel

Pakistan’s official headline inflation rose sharply to 11.1pc year-on-year in August 2026, up from 9.2pc in July 2026.

According to a Topline Securities report, the Consumer Price Index (CPI) for September is expected to rise 10.25-10.75pc year-on-year, down from 11.1pc in August. This projection is slightly lower than the August figure, but does not represent a significant decline.

Petroleum prices have been rising daily in Pakistan and have now reached the highest level in the region. India increased petrol prices by 10pc, while Bangladesh reportedly jacked up by 16pc and Pakistan by over 50pc.

“It is not easy to assess the exact inflation figure for September as oil prices have been changing both internationally and locally. We can only expect slightly lower inflation, with a fear that it may remain close to last month’s level,” said S.S. Iqbal, a money market expert.

With inflation expected to remain at 10.25-10.75pc in September 2026, real interest rates are likely to stand at 75-125 basis points, lower than Pakistan’s historical average of 200-300 basis points, according to the Topline report.

Electricity, housing, food and construction costs have also witnessed increases, suggesting that inflation could come in above analysts’ expectations, particularly if the Gulf war continues for an extended period.

At the same time, Pakistan, Turkiye and Saudi Arabia are preparing to respond to a possible new conflict involving the Houthis and the kingdom, adding to uncertainty over oil prices and supplies. Any disruption could have a direct impact on Pakistan’s economy and inflation.

Pakistan’s foreign exchange reserves, currently exceeding $21.4 billion, may provide some cushion against higher oil import costs. However, they cannot prevent inflationary pressures from rising if the conflict continues and international energy prices remain elevated.

Published in Dawn, September 27th, 2026

Vessels deemed to breach the blockade faced attack wherever they entered the Houthis’ operational reach. Attacks on Saudi tankers and energy infrastructure were followed by traffic through Bab al-Mandeb falling to its lowest level in months. By September, Houthi forces had seized strategic islands around Bab al-Mandeb and gained control of Yemen’s Red Sea coast, increasing their capacity to threaten, disrupt and potentially control maritime traffic through the strait.

The conventional legal position is that naval blockade is a belligerent right associated with international armed conflict (IAC), mainly because it permits interference with neutral commercial shipping. As per this view, a non-state armed group engaged solely in a non-international armed conflict does not ordinarily have the authority to impose a blockade that is binding on neutral vessels. However, customary international law does not conclusively foreclose blockade in a sufficiently intense NIAC, particularly where an organised armed group exercises extensive territorial and governmental control and can enforce maritime restrictions.

This question is particularly significant in Yemen, where there is a strong argument that the Houthis function as a de facto governmental authority rather than merely an insurgent movement. They have long controlled Sana’a, govern territory containing a substantial population, and have expanded along the Red Sea coast and around Bab al-Mandeb. Crucially, under the ICRC approach, effective governmental control, rather than global recognition alone, is central to determining de facto governmental authority. If the Houthis are treated as exercising Yemen’s governmental authority, their external hostilities may be characterised as those of Yemen itself, strengthening the argument that the relevant conflicts are international and that traditional belligerent rights, including blockade, are potentially available.

Even if this characterisation is rejected, other factors point towards possible internationalisation. Saudi Arabia is directly engaged alongside the internationally recognised Yemeni authorities against the Houthis, while the latter have repeatedly attacked Saudi territory. Saudi intervention by invitation does not, by itself, transform the underlying conflict into an IAC, but it adds an international dimension. Israel provides a separate route: it has used force on Yemeni territory in response to Houthi attacks, and under the ICRC’s view, the unconsented use of force by one state against another state’s territory may itself create an IAC between them, even where the immediate target is a non-state armed group. Israeli strikes on Houthi-held territory could therefore support a parallel Israel-Yemen IAC.

Do the Houthis, as a non-state armed group, have the legal authority to enforce a naval blockade?

Iranian involvement provides another possible route to internationalisation. Arms, financing and political support alone are insufficient. Under the International Criminal Tribunal for the former Yugoslavia’s “overall control” test in Tadić, however, the threshold may be met where a state, beyond financing, training or equipping an organised armed group, also participates in planning its military activities; specific instructions for each operation are unnecessary. The ICJ’s stricter “effective control” test, relevant to attribution of particular conduct, requires proof that the state directed or controlled the specific operation in question.

Accordingly, if the conflict is international, traditional blockade law is more readily applicable; if the Houthis remain solely a non-state party to an NIAC, their authority to impose blockade obligations on neutral shipping remains controversial. In either case, a declaration alone is insufficient: a blockade must satisfy the requirements of effectiveness, notification, impartiality and applicable humanitarian limitations.

Regardless of classification, the Houthis are bound by applicable international humanitarian law. In an NIAC, Common Article 3 of the Geneva Conventions and applicable customary IHL apply; in an IAC, the Geneva Conventions apply in full, together with customary IHL. In either case, rules governing distinction, military goals, proportionality and precautions constrain the conduct of hostilities.

The law of naval blockade is further governed by the law of armed conflict at sea and customary international law, as elaborated in the San Remo Manual. Under paragraphs 93-104, a blockade must be declared and notified to belligerents and neutral states; specify its commencement, duration, location and extent; allow neutral vessels an appropriate period to depart; be effective and impartially applied; and comply with humanitarian restrictions, including those concerning essential civilian supplies.

Importantly, the Houthis have denied seeking to close Bab al-Mandeb to international navigation. Their spokesman stated that there was “no closure” of the strait and described the measure as a maritime blockade affecting only the Saudi side. The main legal question, therefore, is not whether the Houthis may close Bab al-Mandeb as a coastal authority, but whether they may lawfully impose and enforce a belligerent blockade against Saudi Arabia and shipping falling within its scope.

Military necessity, however, does not independently make commercial shipping a lawful target. Article 52(2) of Additional Protocol I, reflecting the customary definition of a military objective, requires an object, by its nature, location, purpose or use, to make an effective contribution to military action and for its destruction, capture or neutralisation to offer a definite military advantage. Particular Saudi vessels, ports or assets directly supporting military operations may satisfy that test, but the general contribution of commercial trade to Saudi Arabia’s economy and war capacity does not, by itself, transform every merchant vessel into a military goal. Any attack remains subject to distinction, proportionality and precautions.

This distinction is particularly important for neutral shipping. Neutral vessels do not lose protection merely because they trade with Saudi Arabia or indirectly contribute to its economy. Whether a vessel may lawfully be intercepted, cap­­tured or attacked must be determined under the specific rules governing blockade, neutral shipping and military objectives, rather than through a general invocation of military necessity.

Finally, the simultaneous closure of Hormuz and Bab al-Mandeb would place roughly a quarter of global oil flows and a major share of LNG trade at risk. Some analysts view pressure on both chokepoints as part of a broader Iranian strategy, working through the Houthis to increase economic pressure on the US and its Gulf partners and create leverage over the wider war. Pakistan has condemned Houthi attacks on Saudi Arabia while continuing to stress diplomacy and regional de-escalation. It has so far avoided direct military involvement under the Makkah accord, maintaining a cautious approach that limits the risk of Pakistan being drawn into the widening regional conflict.

The writer is a professor of law at Lums.

Published in Dawn, September 27th, 2026

Islamabad is not witnessing a siege-like situation for the first time; it has become part of life for the inhabitants of the twin cities. Even a cricket match or a visiting dignitary can bring life to a standstill. Despite huge investments in infrastructure and expensive surveillance systems, the security providers remain nervous. They have turned the federal capital into a city of checkpoints, where the average citizen must pass through long queues every 10 minutes during his daily commute — with police officers regarding him with suspicious eyes. Citizens end up feeling that they themselves are responsible for all the country’s ills, while those who have actually encroached on green belts, footpaths, and even highways escape punishment for crimes they do not even understand. The crisis runs deep, and even the postponement of the protest by the PTI, and earlier by the Jamaat-i-Islami, will not solve the country’s political, governance, economic, and security crisis.

These lines may seem cynical, but the streets of the federal capital tell Pakistan’s whole story. The ‘container-ment’ approach shows serious fractures among the power elites over the division of power, which has not been shared proportionately and has, in fact, caused a chronic political crisis and led to a rent-seeking economy. Rent-seeking means economic actors become adept at obtaining privileged access to the state or controlling scarce resources.

The masses are not responsible for the country’s state of affairs; it is fractured power elites who have yet to learn the art of distributing power among themselves. Here, another term needs explaining. The ‘fractured elite’ comprises Pakistan’s dominant political, civil-military, judicial, and institutional elite — sometimes referred to as the establishment — when it no longer agrees on the basic rules of the political game. The elite includes religious and ideological authorities, but in an evolving power order, their role and share have been minimised for now. Major businesses and landed interests have become important actors within the fractured power order.

Serious fractures exist among the elites over the division of power.

A question arises: what does an elite power accord look like? Is it about who will have the political power to govern, and under what conditions? Another question emerges: aside from political power, who holds the real power, also referred to as institutional power? Does this authority belong to parliament, the executive, the military, the judiciary, or the bureaucracy? Institutional power brings control over major economic resources and rents, as well as coercive or security institutions. It also has territorial power to determine how the interests of the centre and the provinces are accommodated. Among the elites, succession remains a key question: how will power change hands? A linked challenge arises. How are influential groups accommodated? Foreign policy remains the exclusive domain of the power elites — what strategic interests are considered non-negotiable?

Now look at the Pakistani elites, which have failed to define the role of political power. Gradually, an institution has assumed authority, while the ruling political parties have surrendered several rights to retain power. The opposition, meanwhile, is demanding its legitimate rights. Many political analysts arguably contend that the opposition, now led by the PTI, along with smaller parties within the opposition alliance, the Tehreek-i-Tahaffuz-i-Ayeen-i-Pakistan, is struggling for power rather than restoring or developing a new social contract in the country. Maulana Fazlur Rahman’s JUI-F is also part of the opposition. It has been marginalised in the power structure because the changing rules in the power playbook leave less space for religious actors now.

The political power structure has clearly failed to advance nationhood, and power remains confined to one major influential ethnic group in the country. Those who represent the power structure in the public discourse and the social and mainstream media malign less powerful and marginalised groups, suggesting they go to Afghanistan — their remarks target both the Pakhtuns and the Baloch. They stigmatise the Kashmiris as well, who have been demanding their rights in Azad Kashmir. If state propagandists are suggesting a course of action for them, where are they supposed to go?

Fractured power elites cannot create cohesion within a nation. They cannot resolve their internal discord, so how can they devise a broad formula for national cohesion? In their paranoid view, security has taken over dialogue, and they have grown accustomed to killing an ant with a hammer. Even when clear indications show dialogue is the best policy, power elites know it would mean accommodating new members in the power club and remain hesitant to admit newcomers.

A lack of flexibility or capacity for dialogue creates a need for a hyper-coercive internal security order. An internal security review is underway to make it more coercive. KP has resisted somewhat by introducing the Police Act, 2026, which will bring provincial government oversight over the system, as was required in the KP context, where discord between the police and other institutions has become challenging. But the federal government is resisting it. It seems the power elites will not compromise on the new internal security order and will continue to push their agenda through Nacta or the interior ministry. Foreign policy and geopolitics are sensitive domains for public discourse in the country. The parameters of non-negotiable interests continue to blur and narrow.

For the masses, the crisis in the country is no more than a long, tragic soap opera on screen, which they can watch, cry over, and laugh at, but cannot act on.

The writer is a security analyst.

Published in Dawn, September 27th, 2026