ISLAMABAD โ The United States and Pakistan have formalized a trade agreement anticipated to facilitate U.S. involvement in the development of Pakistanโs substantial yet largely undeveloped oil reserves, along with implementing reduced tariffs to aid the South Asian nation, representatives from both countries announced on Thursday.
While officials did not disclose exact locations for potential exploration, it is believed that the majority of Pakistanโs oil reserves are situated in Balochistan, a region frequently troubled by conflict. This southwestern province has been a focal point for separatist groups who assert that Islamabad, Pakistanโs capital, is exploiting Balochistanโs natural resources without proper recompense.
U.S. President Donald Trump expressed enthusiasm about the agreement on his Truth Social platform, stating, โWe have successfully reached a deal with Pakistan, which involves collaboration on advancing their substantial oil reserves.โ He further mentioned, โWeโre in the process of selecting an oil company to lead this initiative. Perhaps they will even sell oil to India in the future!โ
In 2024, total trade between the United States and Pakistan amounted to approximately $7.3 billion. The Office of the United States Representative reported on its website that U.S. exports to Pakistan in 2024 reached $2.1 billion, a 4.4% increase compared to 2023. Concurrently, U.S. imports from Pakistan rose by 4.9%, totaling $5.1 billion in 2024.
The announcement has yet to elicit responses from Baloch nationalist and separatist factions. Balochistan remains a hotspot of violence, often attributed to groups like the Balochistan Liberation Army, or BLA, which the United States labeled as a terrorist organization in 2019. These separatists resist both domestic and international resource extraction efforts and have targeted Pakistani security forces as well as Chinese nationals connected to multibillion-dollar projects under the China-Pakistan Economic Corridor.
Potential oil reserves are also speculated to be in the southern region of Sindh, eastern Punjab, and the northwestern Khyber Pakhtunkhwa provinces.
Welcoming the โlong-awaitedโ agreement, Pakistanโs Prime Minister Shehbaz Sharif extended his gratitude to President Trump for his crucial role in finalizing the deal. He highlighted Pakistanโs pursuit of such a trade agreement since May, following Trumpโs intervention in de-escalating tensions between Pakistan and India after an Indian airstrike on Pakistani soil.
The Finance Ministry of Pakistan highlighted the objectives of the agreement in a statement released early Thursday, noting that it aims to enhance bilateral trade, broaden market access, attract investments, and promote cooperation in areas of shared interest.
The agreement came to fruition during a meeting held in Washington, attended by Pakistanโs Finance Minister Muhammad Aurangzeb and key U.S. officials, including Commerce Secretary Howard Lutnick and Trade Representative Ambassador Jamieson Greer.
The pact includes efforts to lower reciprocal tariffs, especially benefiting Pakistani exports to the United States, according to the ministryโs statement. โThe agreement enhances Pakistanโs access to the U.S. market and vice versa,โ the statement noted. It is also expected to stimulate increased American investment in Pakistani infrastructure and developmental ventures. The ministry underscored that the deal signifies both nationsโ dedication to reinforcing bilateral relations and strengthening trade and investment partnerships.