Pakistan and US forge a deal to exploit oil reserves and cut tariffs

In the context of rising economic cooperation, the United States and Pakistan finalized a trade agreement aimed at developing Pakistan’s vast oil reserves. This agreement, announced in late July 2025, is seen as a significant step in strengthening bilateral ties. While specifics of the oil exploration sites were not disclosed, the southwestern province of Balochistan is believed to host most of the reserves. This area, however, has experienced ongoing violence linked to separatists who oppose the extraction of resources. U.S. President Donald Trump lauded the agreement, highlighting its potential to enhance Pakistan's market access and possibly enable oil sales to neighboring India. The trade agreement is not solely focused on oil development; it also includes provisions for reducing tariffs, especially on Pakistani exports to the U.S. This mutual reduction aims to enhance trade relations, which saw U.S. exports to Pakistan reach $2.1 billion and imports from Pakistan total $5.1 billion in 2024. The deal comes after Pakistan had been seeking a trade agreement for several months, especially following heightened tensions with India that prompted U.S. mediation between the two countries. Pakistani Prime Minister Shehbaz Sharif expressed gratitude to Trump for facilitating the agreement, indicating that it reflects a commitment to deepening ties. The anticipated results of this deal may lead to increased U.S. investments in Pakistan’s infrastructure and development projects, targeting areas of mutual interest. Given the hostile environment in Balochistan, the success of these endeavors will likely depend on ensuring security for involved parties. Overall, the agreement marks a pivotal moment in U.S.-Pakistan relations, heralding new opportunities for economic development and collaboration despite the underlying complexities of regional tensions and separatist opposition in the areas where oil reserves are located.