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§2 THE MECHANISM
PSX closed for Ashura at 179,571. While Pakistan was observing, oil kept falling.
KSE-100 closed the shortened week at 179,571 — up 0.36% net despite three consecutive losing sessions. Monday fell 0.25%, Tuesday fell 0.44%, then Wednesday bounced 1.06% on a single catalyst: falling crude oil. Topline Securities confirmed oil prices as the session driver. The oil story runs deeper than one session. Brent was near $126 at the height of the Iran-US conflict. By the Ashura holiday on June 25-26, Brent traded in the $73-75 range — a decline of over $50 in roughly 14 weeks. Pakistan brokered the Islamabad MoU signed June 18. The transmission to PSX: lower import costs ease CPI (transport inflation at 36.8% YoY in May), which creates space for the SBP to cut rates on July 27. On June 25, a cargo vessel was struck by an unidentified projectile in the Strait of Hormuz near the Omani coast, briefly lifting Brent to around $74.7/bbl before prices eased as confidence in shipping flows improved. Saudi Aramco continued crude loading operations at Ras Tanura, while the interim 60-day U.S.–Iran framework formally remained in place despite the incident. Earlier, on June 23, Iranian President Masoud Pezeshkian visited Islamabad, where Pakistan’s mediation efforts were publicly acknowledged during broader bilateral discussions. The falsifier: if the ship incident is the beginning of Hormuz escalation rather than an isolated event, oil reverses and the import-bill savings the market is pricing evaporate. Oil prices Sunday night are the first real data point before Monday's open.
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