Summary
- President Trump announces a strategic energy partnership under the US Pakistan oil deal, despite Pakistan’s limited proven oil reserves.
- Experts question the viability of Pakistan’s hydrocarbon potential, citing failed explorations and unverified seismic surveys.
- The deal raises geopolitical concerns, with implications for South Asian energy markets and US-China-Pakistan dynamics.
Energy Diplomacy Meets Dubious Geology
The sudden declaration of a US Pakistan oil deal has sent ripples through the diplomatic and energy sectors. Announced by former President Donald Trump, the deal positions the United States as a key partner in developing what he described as “massive” oil reserves in Pakistan. However, this proclamation has sparked immediate skepticism among petroleum experts and policy analysts.
Pakistan’s hydrocarbon exploration history has been defined more by dry wells and abandoned projects than lucrative finds. Proven conventional crude oil reserves hover between 234 and 353 million barrels, placing the country around the 50th position globally. For perspective, that constitutes just 0.021 percent of the world’s total reserves—hardly a foundation for what Trump painted as a transformative alliance.
Despite the announcement, the deal’s real substance remains thin. So far, Islamabad has confirmed only that the US Pakistan oil deal is part of a “wider strategic and economic partnership.” Pakistan’s Finance Minister, Muhammad Aurangzeb, hinted at longer-term collaboration beyond hydrocarbons, underscoring the deal’s potential as a strategic maneuver rather than a commercial oil venture.
-Trump: #USA & #Pakistan will work together on developing massive Oil Reserves, they’ll be selling Oil to India
— Insightful Geopolitics (@InsightGL) July 31, 2025
Fact:
-$30Bn for exploration, who will fund
-Shell sold Paki business stake to Saudi Aramco
-15 oil & gas blocks got no international bidders
-Serious security concerns pic.twitter.com/sXZpO1b6fq
Geological Reality Versus Political Narrative
- Proven oil reserves in Pakistan remain negligible on a global scale.
- Past offshore drilling efforts have failed to yield commercial oil or gas discoveries.
For energy experts, the US Pakistan oil deal seems to be built more on speculation than science. The last major announcement of a potential hydrocarbon bonanza came in 2019, when former Prime Minister Imran Khan claimed that Pakistan was on the brink of discovering “Asia’s largest oil and gas reserve.” However, that hope was short-lived. Pakistan’s Petroleum Division later confirmed that the drill site, operated in partnership with ExxonMobil and ENI, was dry even after crossing 5,500 meters.
Petroleum analyst Santanu Saikia points out that any talk of massive reserves is premature. “Unless exploration wells confirm the type of reservoir and volume of hydrocarbons, all you have is speculation,” he explains. While seismic surveys have offered some promise, translating those into commercial wells could take a decade—if they are viable at all.
Adding to the skepticism is the withdrawal of major international oil companies from Pakistan. Over the past few years, Total, Shell, and Eni have scaled down or exited due to a mix of low returns and high security risks, especially in Balochistan, where much of Pakistan’s untapped reserves lie.
Strategic Leverage or Energy Misdirection?
- The US Pakistan oil deal may be aimed at reducing Islamabad’s dependence on China.
- Experts see this as a geopolitical hedge rather than a serious energy pact.
The US Pakistan oil deal may be less about oil and more about strategic positioning. With China already entrenched in Pakistan through the China-Pakistan Economic Corridor (CPEC), Washington’s sudden interest in energy cooperation appears aimed at counterbalancing Beijing’s influence.
Former Indian High Commissioner to Pakistan, G. Parthasarathy, sees the move as an alignment shift. “This is a desperate attempt by the US-China-Pakistan axis to blackmail India,” he commented, questioning whether China would have remained passive had it believed Pakistan was sitting on significant reserves.
Indeed, Trump’s decision to highlight this energy deal coincides with heightened regional energy realignments. India has been deepening its oil partnerships with Russia and the Gulf, while Pakistan remains heavily reliant on imports, with oil accounting for $11.3 billion—or nearly 20%—of its import bill in FY2024–25, according to Pakistan’s central bank.
A 2015 study by the US Energy Information Administration did suggest a technically recoverable shale oil resource of 9.1 billion barrels in Pakistan. But even this remains largely unproven, requiring large-scale hydraulic fracturing and infrastructure that Pakistan currently lacks.
Implications for Regional Energy Markets
- If developed, the US Pakistan oil deal could trigger market shifts in LNG and refined products in South Asia.
- India may need to reassess offshore block development and energy security strategies.
While the current reserves might not inspire confidence, energy analyst Piyush Pandey warns against dismissing the potential strategic ripple effects of the US Pakistan oil deal. “If Pakistan begins producing even modest quantities of oil, it could impact LNG pricing and refined product flows across South Asia,” he says. India, already the third-largest oil consumer globally with 4.9 billion barrels in reserves, may find itself recalibrating exploration efforts and import contracts.
Moreover, if downstream infrastructure improves in Pakistan—backed by US capital and technology—there is potential for Islamabad to negotiate energy transit deals or participate more actively in regional energy forums. In such a scenario, India could face competition in both pricing and geopolitical influence.
That said, this future is not imminent. Pakistan’s refining capacity remains limited, and illegal fuel imports from Iran still account for about 14% of the country’s fuel usage. According to a Pakistani military intelligence report cited by Iran International, approximately $1.02 billion worth of Iranian petrol and diesel was smuggled into Pakistan in 2023 alone.
What Lies Ahead for the Energy Alliance
- The US Pakistan oil deal faces logistical, technical, and political hurdles before it yields results.
- Its success depends on foreign investment, local security, and market access strategies.
Despite the fanfare surrounding the US Pakistan oil deal, turning rhetoric into production will require enormous effort. Exploration will need to ramp up, infrastructure built, and regulatory clarity provided to attract credible investors. Given the region’s instability, security challenges, and history of nationalization threats, this is no easy task.
For now, experts recommend watching closely whether any US-based firms initiate geological surveys, lease blocks, or announce field development plans. In the absence of these moves, the deal risks becoming another instance of “oil nationalism” based more on political timing than petroleum economics.
Still, there is value in watching the strategic trend. If the United States commits even diplomatically to supporting Pakistan’s energy ambitions, it could gradually shift investor sentiment. And if Pakistan takes meaningful steps to improve energy sector governance, the US Pakistan oil deal might yet become a stepping stone toward energy diversification and reduced Chinese dependence.
Closing Perspective
The US Pakistan oil deal may not lead to immediate oil flows, but its strategic undertones are unmistakable. With energy security now a front-line concern in geopolitics, even speculative reserves become tools for leverage. Pakistan, caught between Beijing’s investments and Washington’s overtures, may seek to balance its alliances by using hydrocarbons—real or imagined—as bargaining chips.
For India and the rest of South Asia, this is a signal to remain vigilant. The oil itself might be elusive, but the geopolitical moves surrounding it are very real. The evolving US Pakistan oil deal could yet reshape how nations perceive resource diplomacy in an age of uncertainty.
