Pakistan and US finalize deal to exploit untapped oil reserves

In early July 2025, Pakistan entered into a trade agreement with the United States aimed at developing its largely untapped oil reserves. This deal allows for U.S. assistance in resource exploration and the reduction of tariffs on Pakistani exports to the U.S. Officials from both nations recognized the significance of the collaboration, especially as most of Pakistan's oil reserves are believed to be located in the violence-prone Balochistan province. The agreement highlights the ongoing economic ties and the potential for increased trade collaboration, alongside attracting U.S. investments in Pakistan's infrastructure. The motivation behind the agreement comes amid a backdrop of previous diplomatic efforts and security confrontations in the region. Pakistan has been striving to bolster its economic standing and security situation, particularly after recent skirmishes with India. U.S. President Donald Trump, who played a mediating role in easing tensions between Pakistan and India, noted that the agreement supports a broader goal of strengthening bilateral relations. The agreement was finalized during a meeting in Washington, reflecting a shared commitment towards mutual interests. Additionally, the terms include reciprocal tariff reductions, primarily favoring Pakistani exports entering the U.S. market, which may help stimulate Pakistan's economy and enhance its export capabilities. Experts expect that this partnership will lead to greater infrastructural development and a burgeoning energy sector in Pakistan. However, resistance from local separatists, especially in Balochistan, remains a significant hurdle that could affect implementation. The context of this collaboration also highlights concerns regarding local opposition to foreign involvement in resource extraction. The Balochistan Liberation Army, having previously claimed various attacks against security forces and foreign national projects, could pose challenges during the implementation phase of the agreement. Nevertheless, both nations are optimistic about the outcomes, hoping for an increase in U.S. investment in Pakistan’s infrastructure projects and a marked boost in bilateral trade, which stood at approximately $7.3 billion in 2024.