Why are the US and Pakistan making an oil deal? – DW – 08/01/2025
US President Donald Trump on Wednesday announced a new agreement for the joint development of Pakistan's oil reserves, as both countries work on expanding trade and economic ties.
"We have just concluded a deal with the country of Pakistan, whereby Pakistan and the United States will work together on developing their massive oil reserves," Trump posted on his Truth Social platform.
It wasn't immediately clear what "massive" oil reserves Trump was referring to. Oil is Pakistan's largest import item, accounting for nearly 20% of Pakistan's total import bill, according to central bank data. Most of that oil comes from the Middle East.
Nevertheless, Trump's called the deal "a significant beginning" to a potential long-term energy partnership.
The energy partnership was unveiled by Trump before the White House on Thursday announced a broader trade agreement with Pakistan, and soon thereafter a 19% tariff rate on Pakistani imports to the US. This is lower than the previous rate of 29%
Both countries also hailed the US-Pakistan trade agreement. Pakistan Prime Minister Shehbaz Sharif called it a "landmark deal" that would "enhance our growing cooperation."
The Finance Ministry said the deal marked the "beginning of a new era of economic collaboration especially in energy, mines and minerals, IT, cryptocurrency and other sectors,"
On Friday, Pakistan welcomed the new, lowered, tariff rate, with the Finance Ministry calling it a " balanced and forward-looking approach" from the US.
"This development marks an intriguing shift in Pakistan–US relations; from a traditionally geopolitical and strategic partnership toward a more economically focused cooperation," Azeem Khalid, a New York based international affairs expert, told DW.
Pakistan's tariff rate is also lower than the 25% imposed on arch-rival neighbor India. In announcing the oil deal, Trump took a jab at New Delhi, quipping that India could one day buy Pakistani oil.
"Who knows, maybe they'll be selling oil to India someday!"
To view this video please enable JavaScript, and consider upgrading to a web browser that supports HTML5 video
However, it seems that as of now, oil is flowing in the opposite direction. On Friday, Reuters news agency reported that Pakistan's largest oil refiner, Cnergyico, said it would import 1 million barrels of US crude oil in October via its trading partner, Vitol, a Dutch energy and commodity trading company.
"If it is commercially viable and available, we could import at least one cargo per month," Cnergyico's Vice Chairman Usama Qureshi told Reuters.
As for Pakistani oil, before this deal, Pakistan made several unsuccessful attempts at offshore exploration in the offshore Indus basin. Estimates of Pakistan's proven recoverable conventional crude oil reserves range from 234 million to 353 million barrels, positioning the country approximately 50th in the world in terms of oil reserves.
Untapped oil reserves are believed to be located in Balochistan, with additional prospects in Sindh, Punjab, and Khyber Pakhtunkhwa.
As the center of an armed insurgent movement that frequently carries out attacks, developing resources in Balochistan presents security problems.
Baloch insurgents perceive resource extraction as a form of economic exploitation by Pakistan's federal government and frequently target these kind of projects with attacks.
According to trade law expert Osama Malik, extraction of oil from Balochistan could further alienate a population that is already disgruntled at the exploration of the province's mineral resources by China.
To view this video please enable JavaScript, and consider upgrading to a web browser that supports HTML5 video
Experts have expressed cautious optimism about the recent deal, as it may attract investment, introduce advanced extraction technologies, and facilitate new field surveys. However, actual extraction of petroleum products remains uncertain without confirmed reserves and the necessary infrastructure in place.
"When American companies establish a presence in Balochistan, it is anticipated that the insurgency will not be at its peak," Qamar Cheema, a security analyst, told DW.
"As support for these groups diminishes it will lead to a reduction or potential elimination of the insurgency," he added.
The US has strategic interests in Balochistan due to its proximity to Iran and Afghanistan.
"Washington is focused on establishing a presence in Balochistan, which is rich in minerals and holds significant strategic value due to its proximity to Iran," Cheema said.
Washington views Balochistan as a potential monitoring and pressure point for Iranian activities, particularly amid ongoing tensions regarding Iran's nuclear program and its regional influence.
The agreement also carries potential implications as Washington aims to reduce Pakistan's growing reliance on China.
"Islamabad will also have to balance between the considerable Chinese investment in the energy and mineral sector and future investment by the US," said trade law expert Malik.
China is investing billions into developing rail and road links in Pakistan. The $65 billion China-Pakistan Economic Corridor (CPEC) project is intended for shipping Chinese goods via the Xinjiang region across the mountain border through Pakistan and into the Arabian Sea at Balochistan's Gwadar port.
"From China's perspective, the entry of US companies into Pakistan's resource exploration sector presents a competitive challenge to Chinese oil and mineral firms. Yet, considering the historical depth of Pakistan–China relations, this situation may serve as a diplomatic bridge rather than a point of contention," said international affairs expert Azeem Khalid.
Security expert Cheema, believes Pakistan relies on China for military equipment and on the United States for macroeconomic stability, particularly through the IMF.
"This deal is likely to strengthen the economic partnership between Pakistan and the US. Additionally, the US seeks to establish an alternative ally in the region other than India," said Cheema.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Int'l Business Times
2 hours ago
- Int'l Business Times
Filmmakers Try To Cash In On India-Pakistan Battle
Indian filmmakers are locking up the rights to movie titles that can profit from the patriotism fanned by a four-day conflict with Pakistan, which killed more than 70 people. The nuclear-armed rivals exchanged artillery, drone and air strikes in May, after India blamed Pakistan for an armed attack on tourists in Indian-administered Kashmir. The fighting came to an end when US President Donald Trump announced a surprise ceasefire. Now, some Bollywood filmmakers see an opportunity to cash in on the battle. India tagged its military action against Pakistan "Operation Sindoor", the Hindi word for vermilion, which married Hindu women wear on their foreheads. The name was seen as a symbol of Delhi's determination to avenge those widowed in the April 22 attack in Kashmir's Pahalgam, which sparked the hostilities. Film studios have registered a slew of titles evoking the operation, including: "Mission Sindoor", "Sindoor: The Revenge", "The Pahalgam Terror", and "Sindoor Operation". "It's a story which needs to be told," said director Vivek Agnihotri. "If it was Hollywood, they would have made 10 films on this subject. People want to know what happened behind the scenes," he told AFP. Agnihotri struck box office success with his 2022 release, "The Kashmir Files", based on the mass flight of Hindus from Kashmir in the 1990s. The ruling right-wing Bharatiya Janata Party gave that film a glowing endorsement, despite accusations that it aimed to stir up hatred against India's minority Muslims. Since Hindu nationalist Prime Minister Narendra Modi took office in 2014, some critics say Bollywood is increasingly promoting his government's ideology. Raja Sen, a film critic and screenwriter, said filmmakers felt emboldened by an amenable government. "We tried to wage a war and then we quietened down when Mr Trump asked us to. So what is the valour here?" Sen told AFP of the Pakistan clashes. Anil Sharma, known for directing rabble-rousing movies, criticised the apparent rush to make films related to the Pahalgam attack. "This is herd mentality... these are seasonal filmmakers, they have their constraints," he said. "I don't wait for an incident to happen and then make a film based on that. A subject should evoke feelings and only then cinema happens," said Sharma. Sharma's historical action flick "Gadar: Ek Prem Katha" (2001) and its sequel "Gadar 2" (2023), both featuring Sunny Deol in lead roles, were big hits. In Bollywood, filmmakers often seek to time releases for national holidays like Independence Day, which are associated with heightened patriotic fervour. "Fighter", featuring big stars Hrithik Roshan and Deepika Padukone, was released on the eve of India's Republic Day on January 25 last year. Though not a factual retelling, it drew heavily from India's 2019 airstrike on Pakistan's Balakot. The film received mixed-to-positive reviews but raked in $28 million in India, making it the fourth highest-grossing Hindi film of that year. This year, "Chhaava", a drama based on the life of Sambhaji Maharaj, a ruler of the Maratha Empire, became the highest-grossing film so far this year. It also generated significant criticism for fuelling anti-Muslim bias. "This is at a time when cinema is aggressively painting Muslim kings and leaders in violent light," said Sen. "This is where those who are telling the stories need to be responsible about which stories they choose to tell." Sen said filmmakers were reluctant to choose topics that are "against the establishment". "If the public is flooded with dozens of films that are all trying to serve an agenda, without the other side allowed to make itself heard, then that propaganda and misinformation enters the public psyche," he said. Acclaimed director Rakeysh Omprakash Mehra said true patriotism is promoting peace and harmony through the medium of cinema. Mehra's socio-political drama "Rang De Basanti" (2006) won the National Film Award for Best Popular Film and was chosen as India's official entry for the Golden Globe Awards and the Academy Awards in the Best Foreign Language Film category. "How we can arrive at peace and build a better society? How we can learn to love our neighbours?" he asked. "For me that is patriotism." India tagged its military action against Pakistan "Operation Sindoor", the Hindi word for vermilion, which married Hindu women wear on their foreheads AFP The nuclear-armed rivals exchanged artillery, drone and air strikes in May, after India blamed Pakistan for an armed attack on tourists in Indian-administered Kashmir AFP
Int'l Business Times
3 hours ago
- Int'l Business Times
Peace Offering? Donald Trump's Nobel Obsession
A craving for international prestige, a decade-long Obama rivalry and perhaps a dash of provocation: a mercurial melange of factors is at play in Donald Trump's obsession with the Nobel Peace Prize. "It's well past time that President Trump was awarded the Nobel Peace Prize," White House press secretary Karoline Leavitt told reporters on July 31, prompting reactions of disbelief and sarcasm from the Republican leader's opponents. Since his January 20 return to power, the US president "has brokered, on average, one peace deal or ceasefire per month," Leavitt said, citing as examples his mediations between India and Pakistan; Cambodia and Thailand; Egypt and Ethiopia; Rwanda and the Democratic Republic of Congo (DRC); Serbia and Kosovo; and others. His leading spokeswoman also mentioned Iran, where Trump ordered US strikes against the Islamic republic's nuclear facilities, as evidence of decisions Leavitt claims have contributed to world peace. She made no mention of the conflict in Ukraine, which Trump pledged multiple times to end on "day one" of his term, or the war in Gaza, which rumbles on and for which the US supplies Israel with weapons. For some foreign leaders, mentioning the prestigious award has become a sign of diplomatic goodwill toward an American president who envisions himself as a peacemaker. Pakistan nominated Trump for the Nobel Peace Prize, as did Israeli Prime Minister Benjamin Netanyahu. During an early July meeting at the White House, a journalist asked the presidents of Liberia, Senegal, Mauritania, Guinea-Bissau, and Gabon whether Trump deserved the award. Basking in the flattering responses from the African leaders, a smiling Trump said: "We could do this all day long." Tens of thousands of people can offer a nomination to the Nobel committee, including lawmakers, ministers, certain university professors, former laureates and members of the committee themselves. Nominations are due by January 31, with the announcement coming in October -- this year on the 10th of the month. Law professor Anat Alon-Beck, who is an Israeli-American, submitted Trump's name to the committee's five members, who were appointed by the Norwegian Parliament. The assistant professor at Case Western Reserve University School of Law told AFP she did so because of the "extraordinary leadership" and "strategic brilliance" he has shown, in her opinion, in advancing peace and securing the release of hostages held in the Gaza Strip. For some, the prospect of handing the prize to someone who has upended the international order is untenable. "Nominating Trump for the Nobel Peace Prize is like entering a hyena in a dog show," US history and politics researcher Emma Shortis wrote on news site The Conversation. "Of course Trump does not deserve it." The American president disagrees. "I deserve it, but they will never give it to me," Trump told reporters in February as he hosted Netanyahu at the White House, lamenting not ticking the Nobel box in his life. "No, I won't get a Nobel Peace Prize no matter what I do, including Russia/Ukraine, and Israel/Iran, whatever those outcomes may be," Trump griped on his Truth Social platform in June. "But the people know, and that's all that matters to me!" Trump is well-known as someone who is particularly fond of accolades and prizes, Garret Martin, a professor of international relations at American University, told AFP, "so he would welcome this major international recognition." And since the beginning of his presidential ambitions 10 years ago, "he has put himself in opposition to Barack Obama, who famously won the Nobel Peace Prize in 2009," Martin added. The prize awarded to the Democratic former president, barely nine months after he took office, sparked heated debate -- and continues to do so. "If I were named Obama I would have had the Nobel Prize given to me in 10 seconds," Trump bellyached in October 2024, during the final stretch of the presidential campaign. Three other US presidents have also been so honored: Theodore Roosevelt, Woodrow Wilson, and Jimmy Carter. The prize was also awarded to Henry Kissinger in 1973 for his efforts to help end the war in Vietnam. The choice of the one-time US secretary of state was heavily criticized. The full list of Nobel Peace Prize nominees is confidential -- except for individual announcements by sponsors -- but their number is made public. In 2025, there are 338 nominees. Some betting sites have Trump in second place to win, behind Yulia Navalnaya, the widow of Russian opposition leader Alexei Navalny. US President Donald Trump has spoken repeatedly about his interest in winning the Nobel Peace Prize AFP
DW
13 hours ago
- DW
Ukraine: Kyiv says it hit Russian oil, military facilities – DW – 08/02/2025
Ukraine says it has struck some key oil and military facilities on Russian territory. A blaze that broke out near the Zaporizhzhia Nuclear Plant after Ukrainian shelling has been brought under control. DW has the latest. Ukraine's military says it has hit key infrastructure inside Russia, including a significant oil refinery. Kyiv also says it struck a military airfield used for drones and an electronics factory. A fire that broke out near the Zaporizhzhia Nuclear Power Plant after Ukrainian shelling has been brought under control, according to Russian authorities. Meanwhile, the has reported that Indian government sources have revealed there are no plans to stop buying oil from Russia. This is despite US President Donald Trump's threats to impose penalties on will keep purchasing oil from Russia despite US President Donald Trump's threats of penalties. This is according to two Indian government sources and reported on by the Reuters news agency, via the. "These are long-term oil contracts," Reuters reported one of the sources as saying. "It is not so simple to just stop buying overnight." Trump last month suggested on social media that India would face additional penalties for purchases of Russian arms and oil. To view this video please enable JavaScript, and consider upgrading to a web browser that supports HTML5 video A fire that broke out near the Zaporizhzhia Nuclear Power Plant after Ukrainian shelling has subsided after being brought under control, the Moscow-installed administration of the Russian-held plant in Ukraine said on Saturday. Russia seized the Zaporizhzhia plant in the first weeks of its full-scale invasion of Ukraine, which got underway in February 2022. Since Moscow took the plant, both sides have accused each other of firing or taking other measures that could increases the danger of a nuclear accident. To view this video please enable JavaScript, and consider upgrading to a web browser that supports HTML5 video Ukraine said it had struck infrastructure within Russia, including a major oil refinery as well as a military airfield for drones and an electronics factory. Ukraine's Unmanned Systems Forces (USF) said the military had hit the refinery in Ryazan, some 180 kilometers (110 miles) southeast of Moscow. The attack sparked a fire on its premises. The USF said it also hit the Annanefteprodukt oil storage facility in the Voronezh region. Elsewhere, the Ukrainian SBU intelligence agency said its drones had hit Russia's Primorsko-Akhtarsk military airfield. The airbase has been used to launch waves of long-range drones at targets in Ukraine. The SBU said it also struck a plant in Penza. According to the intelligence agency, the factory supplies Moscow's military-industrial complex with electronics. Ukraine's military said Saturday that it had hit key infrastructure inside Russia, including a significant oil refinery, as well as a military airfield used for drones, and an electronics factory. Mwanwhile, a fire broke out near the Zaporizhzhia Nuclear Power Plant after Ukrainian shelling, before being brought under control. According to the , Indian government sources have revealed there are no plans to stop buying oil from Russia. This is despite US President Donald Trump's threats to impose penalties on New Delhi.
