In July 2025, Pakistan and the US finalize oil deal, considered to be a strategic trade agreement focused on developing Pakistan’s domestic oil reserves, signaling a potential turning point for the country’s energy sector.
Details of US Oil Deal
The deal was secured following high-level talks in Washington, led by Pakistan’s Finance Minister Muhammad Aurangzeb. A key component of the agreement is a joint exploration and extraction plan targeting key regions such as Balochistan, Khyber Pakhtunkhwa, and offshore zones along the Arabian Sea.
According to the U.S. Energy Information Administration, Pakistan has proven oil reserves of around 353 million barrels, with untapped shale oil potential estimated at up to 9 billion barrels. The agreement aims to leverage U.S. technical expertise and capital to overcome longstanding infrastructure and security challenges that have limited domestic exploration.
Current Situation before US Finalize Oil Deal
Currently, Pakistan spends over $12 billion annually on fuel imports from countries like Saudi Arabia and Qatar, placing immense pressure on the economy. The oil partnership is seen as a step toward reducing this dependency and narrowing Pakistan’s $11.3 billion oil import bill.
Local analysts view the move as promising, especially for offshore exploration, which is relatively shielded from the militant activity that has hindered projects in some land-based zones. Industry voices on X (formerly Twitter) have expressed cautious optimism — with many highlighting its potential to revive investor confidence and others warning of governance and transparency issues if the process isn’t handled properly.
What’s Next
The government is currently in the process of selecting a U.S. oil company to lead the initiative. If executed well, the deal could reshape Pakistan’s energy landscape and strengthen Pakistan-US economic relations, especially in light of parallel discussions on tariff reductions and trade facilitation.
Published in SouthAsianDesk, July 31st, 2025
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