Pakistan considers US oil as trade deficit solution

KARACHI: Pakistan is considering importing crude oil from the US for the first time to offset a trade imbalance that triggered higher US tariffs, according to a government source directly involved with the proposal and a refinery executive.

Countries are scrambling to find ways to lower their US tariff burdens, including buying more US oil and gas, as US President Donald Trump’s sweeping import duties rattle economies and markets.

“It is one of the products being reviewed ahead of a delegation leaving for the US to talk about tariffs,” said a government source directly involved with the proposal to the prime minister to buy more US crude.

“It is under active consideration. We are exploring opportunities and the structure to do it, but the PM has to approve it,” he said. Trump has imposed a 10 per cent baseline tariff on all imports to the US and higher duties on dozens of other countries.

Pakistan faces a 29 per cent tariff due to a trade surplus with the US of about $3 billion, although that is subject to the 90-day pause Trump announced last week. The refinery executive told Reuters that the idea is to buy US crude equivalent to Pakistan’s current imports of oil and refined products, or about $1 billion of oil.

The sources declined to be named as the proposal is in its preliminary stage. Pakistan’s petroleum ministry did not immediately respond to a request for comment. Pakistan imported 137,000 barrels per day of crude in 2024, mostly light grades from the Middle East, with Saudi Arabia and the United Arab Emirates among its top suppliers, data from analytics firm Kpler showed.

Oil imports amounted to $5.1 billion in 2024, data from Pakistan’s central bank showed. In February, Saudi Arabia, through the Saudi Fund for Development (SFD), extended a $1.2 billion financing facility to Pakistan for the import of oil products for a year.

The SFD has provided approximately $6.7 billion to Islamabad for oil products since 2019. Before Trump’s partial tariff pause last week, Pakistan said that it would send a delegation to the US in the coming weeks to negotiate new tariffs.

Several big energy importers are looking to buy more from the US to ease trade surpluses. Last Friday, Indian state gas firm GAIL India Ltd issued a tender to buy a 26 per cent stake in a US liquefied natural gas (LNG) project and import LNG, while Japan, South Korea and Taiwan have discussed participating in an LNG project in the US state of Alaska.