Pakistan has requested a $6.7 billion concessional oil financing facility from Saudi Arabia to be repaid over 15 years, as the government moves to secure energy supplies amid an escalating Middle East conflict that threatens to keep global oil prices elevated and strain foreign exchange reserves.
A spokeswoman of the Ministry of Economic Affairs confirmed to The Express Tribune that talks on the Saudi oil facility, structured on deferred payments, were ongoing between the two governments. Sources said Pakistan was seeking the facility at a one percent interest rate, along with a five year grace period within the 15 year repayment term. The matter has been discussed at the ministerial level.
“The matter is under consideration between the two governments,” the spokeswoman said, responding to a question on whether Pakistan had formally approached the Saudi Fund for Development (SFD) for the facility.
Saudi Arabia has supplied oil to Pakistan on one year deferred payment terms since 2019. The most recent facility, worth $1.2 billion, was signed in February 2025 and expired in April. That agreement, finalised before the Pak-Saudi Strategic Partnership Agreement, carried a 6 percent interest rate, according to ministry officials. Since 2019, the SFD has provided Pakistan with approximately $6.7 billion in total financing for oil derivatives.
The push for a new facility comes as renewed hostilities between Iran and the United States have driven Brent crude prices up by $15 per barrel, intensifying energy and food security risks across the region.
Pakistan is also examining ways to reduce upcoming external debt repayments, including Chinese energy debt, with officials saying a workable solution could reduce the need for a fresh International Monetary Fund (IMF) programme once the current arrangement expires in September next year.
The country imported $14 billion worth of petroleum products between July and May of the last fiscal year, central bank data showed, broadly unchanged from the previous year due to a $1.2 billion decline in liquefied natural gas imports. Continued regional hostilities could further strain reserves given exports of $30.1 billion in the last fiscal year.
Saudi Arabia has become Pakistan of the largest bilateral lenders after China. It recently provided $3 billion in short-term deposits through the SFD to help Pakistan repay debt owed to the United Arab Emirates.
On Sunday, Finance Minister Muhammad Aurangzeb and Power Minister Sardar Awais Leghari met Saudi Finance Minister Mohammed bin Abdullah Al-Jadaan to discuss deepening economic and energy cooperation, with both sides reaffirming commitment to expanding bilateral ties.
Riyadh has also assured the IMF of its intent to maintain cash deposits with Pakistan, which have risen to $8 billion as of early July. Following the IMF board approval of a $1.3 billion loan tranche, the Fund’s Executive Director acknowledged the financial support of Pakistan bilateral and multilateral partners, particularly China and Saudi Arabia.
The IMF third staff level report has not factored the proposed Saudi oil facility into its projected inflows for Pakistan for the 2026-27 and 2027-28 financial years. Officials said any such agreement would help offset rising fuel import costs. Saudi Arabia also remains the single largest source of remittances to Pakistan, with overseas Pakistanis sending $9.8 billion from the Kingdom last fiscal year, accounting for 24 percent of total remittances received.
