In a bid to reportedly counter the Iranian influence in the region, Saudi Arabia has agreed to restart oil aid to Pakistan worth at least $1.5bn annually from next month, reported Financial Times quoting officials in Islamabad.
Last year, Saudis demanded that Pakistan repay a $3bn loan after Islamabad pressured Saudi Arabia to criticise India’s nullification of Kashmir’s special status. However, the rift was bridged in May after PM Imran Khan met Saudi Crown Prince Mohammed bin Salman in May.
According to the FT: “News of the oil deal with Pakistan comes as Saudi Arabia embarks on a diplomatic push with the US and Qatar to build a front against Iran, said analysts. Riyadh lifted a three-year blockade of Qatar in January in what experts said was an attempt to curry favour with the newly elected Joe Biden.”
A senior Pakistan government official quoted by FT said: “Our relations with Saudi Arabia have recovered from [a downturn] earlier. Saudi Arabia’s support will come through deferred payments [on oil] and the Saudis are looking to resume their investment plans in Pakistan.”
This was also confirmed by our reporter in Islamabad who reported that this time around the Saudis will give Pakistan oil worth $1.5 billion instead of $3.4bn on credit. Sources in the finance ministry told The Correspondent that the credit facility will resume in July and all the modalities in this regard have been finalised. They termed it proof of “Saudi-Pakistan” friendship.
The Saudi offer is less than half of the previous oil facility of $3.4bn, which was put on hold when ties frayed. Pakistan’s foreign reserves were more than $16bn in June compared with about $7bn in 2019 before it entered its $6bn IMF programme.