Pakistan is seeking a new $6.7 billion Saudi oil financing arrangement over 15 years as rising petroleum import costs put pressure on its external financing needs and foreign exchange reserves. Finance Minister Muhammad Aurangzeb met Saudi Fund for Development (SFD) chief executive Sultan Abdulrahman Al-Marshad in Bangkok on October 13, 2026, where the revival of an earlier $1.2 billion annual deferred-payment oil facility was reportedly raised. Saudi Arabia is reportedly examining Pakistan’s request, but no final approval or signed agreement has been announced.
Why Pakistan Wants a New Saudi Oil Deal
Pakistan relies heavily on imported petroleum to meet domestic energy demand. When international oil prices rise, the country must spend more foreign currency on fuel, putting additional pressure on its balance of payments and foreign exchange reserves. According to reporting published by The Express Tribune and ProPakistani on October 14, Pakistan’s petroleum import bill increased by 5.8% to $16.8 billion in fiscal year 2025-26. Crude oil import costs rose by 32% to $7.2 billion in the same period, and then increased by a further 40% in July and August of the current fiscal year. The Express Tribune linked the request to energy security concerns amid the Middle East conflict, which may keep global oil prices high
The proposed facility would aim to spread financing obligations over a longer period rather than requiring Pakistan to meet the full cost of eligible oil imports immediately. Such an arrangement could provide breathing room for external payments, although its actual impact would depend on the final terms, eligible imports and repayment schedule.
What Is the Proposed $6.7 Billion Facility?
Pakistan is seeking a long-term concessional oil financing arrangement from Saudi Arabia through the Saudi Fund for Development. The request follows years of cooperation: since 2019, Saudi Arabia has supplied oil to Pakistan on one-year deferred payment terms, and the SFD has provided approximately $6.7 billion in financing for oil derivatives over that period. The new $6.7 billion request is a separate, forward-looking figure and should not be confused with that cumulative total.
The most recent annual facility, worth $1.2 billion, was signed in February 2025 and expired in April 2026. The Express Tribune reported, citing Economic Affairs Ministry officials, that it carried an interest rate of 6%. The request for a longer-term facility was first reported in mid-July, when a ministry spokeswoman said the matter was “under consideration between the two governments.” Sources cited at that time said Pakistan wanted a 1% interest rate with a five-year grace period, but neither those terms nor the facility’s final size has been confirmed by either side.
The $6.7 billion figure represents the value of the financing being sought, not money already transferred to Pakistan.
What Did Pakistan and Saudi Arabia Discuss?
Aurangzeb met Al-Marshad on the sidelines of the World Bank Group and IMF annual meetings in Bangkok, Thailand. According to The Express Tribune, Pakistan took up the revival of the $1.2 billion deferred-payment oil facility. The Finance Ministry’s own account of the meeting did not mention the oil facility or disclose any Saudi response; media reports said Saudi Arabia was examining the request.
The ministry said discussions focused on expanding trade and investment, strengthening private-sector engagement, following up on the bilateral investment protection agreement and exploring opportunities for refinery upgrades. It added that both sides reviewed progress on SFD-supported projects and stressed the need to develop a new pipeline of projects, and that the SFD reaffirmed its continued support for Pakistan within its mandate.
Aurangzeb also highlighted Pakistan’s improving macroeconomic position and renewed access to international capital markets.
How Could the Deal Affect Pakistan’s Economy?
If approved on favourable terms, Saudi oil financing could help manage the timing of payments for eligible energy imports. By reducing immediate cash requirements, it could ease short-term pressure on foreign exchange reserves and help the government plan external payments.
However, deferred payment is not the same as free oil or a grant. Financing creates obligations that must be met under the agreed conditions, so the long-term benefit would depend on the financing cost, the repayment period and whether the arrangement reduces overall pressure rather than simply shifting it into future years.
Pakistan’s petroleum import bill also remains exposed to international prices, exchange-rate movements and domestic fuel demand. The facility would not, on its own, eliminate those risks.
The IMF’s third staff-level report did not include the proposed Saudi oil facility in its projected inflows for Pakistan for fiscal years 2026-27 and 2027-28. The proposal should therefore not be treated as confirmed financing in those projections.
Pakistan-Saudi Arabia Economic Cooperation
Saudi Arabia has been an important financial partner for Pakistan through oil financing, deposits and development projects. Separately from the oil facility, it extended $3 billion in short-term financing to Pakistan through the SFD, which was rolled over for three months in July and helped Pakistan meet debt repayment obligations to the United Arab Emirates.
If both sides reach a final understanding, the proposed oil facility would build on that relationship. For Pakistan, the priority is to secure reliable energy financing without creating unsustainable future repayment obligations. Any final announcement will need to clarify the facility’s size, duration, financing cost and conditions.
$6.7 billion Saudi oil financing
Pakistan’s proposed $6.7 billion Saudi oil financing facility could provide important support as the country manages expensive energy imports and external payment pressures. Talks between Finance Minister Aurangzeb and the Saudi Fund for Development show that the issue remains on the bilateral agenda, but the arrangement has not been confirmed as a completed deal. The next decisive step will be an official announcement detailing Saudi Arabia’s response and the financing conditions. Until then, the proposal represents a potential source of support rather than secured funding.
