IntelScoops

Washington/Islamabad — July 31, 2025 — The United States and Pakistan have finalized a significant bilateral agreement aimed at reducing trade tariffs and bolstering Pakistan’s domestic energy development, including joint efforts to explore and develop the country’s untapped oil reserves.

In a joint statement released by both governments on Wednesday, officials confirmed that the deal will see a phased reduction in U.S. tariffs on key Pakistani exports—such as textiles, leather goods, and surgical instruments—in a move designed to stimulate trade between the two countries. In return, Pakistan has committed to structural reforms in its customs and export infrastructure to ensure compliance with international standards.

Alongside the trade component, the agreement includes a landmark energy cooperation framework under which the U.S. will provide technical assistance, investment advisory, and private sector facilitation for the development of Pakistan’s oil reserves. This will include geological surveys, regulatory support, and a pipeline of potential U.S. energy investors.

“This agreement marks a new chapter in U.S.-Pakistan economic relations,” said U.S. Trade Representative Katherine Tai. “By enhancing trade and energy cooperation, we are deepening our strategic engagement with a key regional partner while supporting sustainable growth in South Asia.”

Pakistani Commerce Minister Jam Kamal described the deal as “transformational,” particularly for the country’s struggling energy sector. “Pakistan’s oil reserves remain largely untapped due to a lack of investment and technical expertise. This agreement opens the door to unlocking that potential in a way that benefits our economy and improves energy security,” he said.

The deal comes at a time of growing economic instability in Pakistan, with persistent inflation, energy shortages, and pressure on foreign reserves. Analysts suggest the U.S. partnership could help stabilize key sectors while providing an incentive for further reforms.

Energy experts have welcomed the initiative, noting that Pakistan’s oil reserves, especially in Balochistan and Sindh, have long been underexplored. U.S. involvement could also signal greater geopolitical alignment, especially in counterbalancing China’s growing footprint in Pakistan’s infrastructure and energy development under the China-Pakistan Economic Corridor (CPEC).

The agreement is set to be implemented over the next 12 to 18 months, with bilateral working groups to oversee trade facilitation, energy collaboration, and investment pathways.

While the deal is expected to boost Pakistan’s export competitiveness in U.S. markets and attract investment into its energy sector, it also underscores Washington’s broader strategy of economic engagement in South Asia amid rising global tensions and shifting alliances.