Pakistan Seeks $6.7 Billion Saudi Oil Financing Deal Over 15 Years
Pakistan has approached Saudi Arabia for a proposed 15-year oil financing facility worth $6.7 billion as the government looks to ease pressure on foreign exchange reserves and manage rising fuel import costs.
Finance Minister Muhammad Aurangzeb discussed the proposal with Saudi Fund for Development (SFD) Chief Executive Officer Sultan Abdulrahman Al-Marshad on the sidelines of the World Bank and International Monetary Fund annual meetings in Thailand.
The request includes reviving an existing arrangement that allowed Pakistan to import $1.2 billion worth of oil annually through deferred payments. The Finance Ministry has not disclosed Saudi Arabia’s official response, although sources familiar with the discussions said the proposal was under consideration.
Existing Saudi Oil Facility Has Expired
Saudi Arabia has supported Pakistan’s energy requirements through deferred oil payments since 2019. The most recent agreement was signed in February 2025 and expired in April 2026.
Pakistan is now seeking a longer-term arrangement to reduce immediate foreign financing requirements and help manage payments for essential energy imports.
Under a deferred payment facility, Pakistan can receive oil without paying the full cost immediately, allowing it to manage its foreign exchange requirements over an agreed period.
Rising Oil Imports Increase Financial Pressure
Pakistan’s petroleum import bill rose by 5.8 percent to $16.8 billion in fiscal year 2025-26, while crude oil import costs increased by 32 percent to $7.2 billion.
The pressure continued into the current fiscal year, with crude oil import costs reportedly rising by another 40 percent during July and August.
A long-term Saudi financing arrangement could help Pakistan manage these payments and reduce immediate pressure on its external financing position.
However, the International Monetary Fund has not included the proposed Saudi oil facility in its projected financing inflows for Pakistan for fiscal years 2026-27 and 2027-28, according to its third staff-level report.
Saudi Arabia Previously Provided $3 Billion Support
Saudi Arabia has also extended $3 billion in short-term financing to Pakistan through the SFD. The amount was rolled over for three months in July, helping Islamabad meet debt repayment obligations to the United Arab Emirates.
Economic Affairs Ministry officials have said the previous deferred oil facility carried an interest rate of 6 percent.
Since 2019, the SFD has provided approximately $6.7 billion in financing for Pakistan’s oil imports, according to the report.
Pakistan and Saudi Arabia Discuss Investment Cooperation
During the meeting, Aurangzeb briefed the Saudi delegation on Pakistan’s improving macroeconomic position and renewed access to international capital markets.
The discussions also covered opportunities to expand bilateral trade, encourage private-sector investment, follow up on the bilateral investment protection agreement and explore refinery upgrades.
The Finance Ministry said both sides reviewed progress on projects supported by the SFD and highlighted the importance of developing a new pipeline of initiatives.
The SFD reaffirmed its continued support for Pakistan within its mandate.
Long-Term Financing Could Ease Import Payments
Pakistan’s proposed $6.7 billion oil financing arrangement is aimed at providing greater flexibility in meeting energy import costs and managing external financing needs.
If Saudi Arabia agrees to the proposal, the longer-term facility could help Islamabad spread oil payments over an extended period. However, the final terms, approval and implementation timeline remain unconfirmed.
