President Trump's recent announcement of a trade deal with Pakistan to develop its oil reserves has sparked considerable interest and, inevitably, a degree of skepticism, particularly regarding the actual extent of Pakistan's oil wealth. The announcement, made via a Truth Social post, stated that the U.S. and Pakistan would collaborate on developing Pakistan's "massive Oil Reserves". Trump also suggested that Pakistan might one day sell oil to India.
However, the question remains: does Pakistan genuinely possess "massive" oil reserves? While the country has been known to possess oil deposits, the term "massive" might be an overstatement. As of 2016, Pakistan held 353.5 million barrels of proven oil reserves, ranking 52nd in the world and accounting for approximately 0.021% of the world's total oil reserves. These reserves are equivalent to about 1.7 times Pakistan's annual consumption levels, suggesting that, without imports, the country would have roughly two years of oil supply left.
It's important to note that these figures represent proven reserves. The United States Energy Information Administration (EIA) has estimated that Pakistan may have over 9 billion barrels of petroleum oil. This figure, however, includes potential reserves that have not yet been proven or are technically difficult or economically unfeasible to extract.
Pakistan's current oil production stands at approximately 88,262 barrels per day, ranking 53rd globally. However, its consumption is significantly higher, at 556,000 barrels per day, making it the 33rd largest consumer of oil in the world. To bridge this gap, Pakistan imports a substantial 24% of its oil consumption.
Historically, oil production in Pakistan was primarily confined to the Potwar Plateau until 1981, when oilfields were discovered in Lower Sindh. By the late 1990s, the Lower Sindh gas fields were producing more oil than the Potwar Plateau, and new deposits have since been found in the region.
Trump's announcement comes at a complex geopolitical juncture. Just hours before revealing the Pakistan deal, he announced a 25% tariff and additional penalties on imports from India, citing trade imbalances and India's oil purchases from Russia. The reference to Pakistan potentially selling oil to India was particularly striking given these recent tariff impositions.
The U.S. goods trade deficit with Pakistan reached $3 billion in 2024, a 5.2% increase from the previous year. Total trade between the two nations amounted to $7.3 billion. Pakistan has reportedly offered to reduce its trade deficit with the U.S. by increasing imports of American goods, including oil, as an alternative to accepting higher tariffs.
While the full details of the U.S.-Pakistan trade deal remain unclear, it appears to be in its early stages, with the selection of a lead oil company still pending. The Pakistani embassy in Washington has not yet issued a statement. Whether this partnership will truly unlock "massive" oil reserves in Pakistan remains to be seen.
