Islamabad/Washington, July 30-31, 2025:
U.S. President Donald Trump announced on July 30 that the United States and Pakistan have finalized a trade agreement to jointly develop Pakistan’s oil reserves. He stated that the selection process for a U.S. oil company to lead the initiative is currently underway. Trump added, “Maybe they’ll be selling oil to India someday,” suggesting potential long-term business between Islamabad and New Delhi.
Deal Overview
While the announcement did not include detailed documentation, it came after recent high-level diplomatic talks focused on trade strategy and foreign relations. Pakistani Foreign Minister Ishaq Dar recently met with U.S. Secretary of State Marco Rubio in Washington. Their discussions included ways to expand cooperation in critical minerals, mining, and energy. Both sides indicated that they were close to finalizing a broader trade agreement.
Pakistan’s Oil Potential Under Scrutiny
Despite Trump’s claim of “massive” reserves, energy experts have expressed caution. Pakistan has historically had modest proven oil reserves, approximately 193 million barrels as of 2023. Recent offshore discoveries remain unconfirmed, necessitating further exploration to evaluate commercial viability. Currently, the geological and financial feasibility of large-scale extraction is uncertain.
At the same time, Pakistan’s mineral wealth, including copper, gold, and lithium, is drawing increasing interest. These resources may serve as the basis for deeper U.S.-Pakistan cooperation in the future.
Strategic Context
The energy agreement aligns with broader changes in U.S. trade policy in South Asia. On the same day as the announcement, President Trump imposed a 25% tariff on Indian imports and suggested additional penalties, citing India’s defense and energy ties with Russia.
With a $3 billion trade surplus to the U.S. in 2024 and worries about retaliatory tariffs, Pakistan has been working to finalize a trade agreement with Washington. As part of this, Islamabad has reportedly agreed to boost U.S. imports, including crude oil, and allow greater access for investment.
The United States has also reaffirmed Pakistan’s status as a “major non-NATO ally,” positioning Islamabad as a strategic partner in the region amid ongoing global power shifts.
Looking Ahead
- Timeline & Execution: The timeline for selecting an oil company and starting development remains unclear. Pakistani authorities have yet to issue formal communication on this matter.
- Viability Questions: The lack of verified geological surveys has raised doubts about whether the oil reserves can be exploited on a large scale.
- Geopolitical Impact: If Pakistan eventually exports oil to India, it could change energy dynamics in South Asia, although regional tensions may complicate this possibility.