U.S. President Donald Trump on Wednesday night announced a new bilateral agreement with Pakistan for the joint development of its untapped oil reserves, marking a significant shift in energy and trade ties between the two nations.
“We have just concluded a deal with the country of Pakistan, whereby Pakistan and the United States will work together on developing their massive oil reserves,” he wrote in a statement posted on social media platform TruthSocial. He said the U.S. is currently in the process of selecting a company to lead the initiative. “Who knows, maybe they’ll be selling oil to India someday!” he quipped.
Reacting to Trump’s announcement, Prime Minister Shehbaz Sharif said the two countries had finalized their trade agreement. “I wish to convey my profound thanks to President Trump for his leadership role in finalization of the historic U.S.-Pakistan trade agreement, successfully concluded by our two sides in Washington, last night,” he wrote on X. “This landmark deal will enhance our growing cooperation so as to expand the frontiers of our enduring partnership in days to come,” he added.
Trade deals
The energy agreement comes as Washington intensifies efforts to reshape global trade dynamics. Trump said his administration was “very busy” finalizing new trade deals, engaging with multiple world leaders eager to “make the United States extremely happy.”
According to the U.S. president, several countries have offered tariff reductions to help slash the U.S. trade deficit. In an apparent indication of India’s unwillingness to offer the type of deal Trump is seeking, his administration recently imposed a 25% tariff on Indian imports. In a statement, it cited “unfair trade practices.” On Wednesday night, the U.S. imposed sanctions on several Indian companies for their purchase of Russian oil.
Economics and diplomacy
There have been growing indications of Pakistan extending goodwill to the U.S. in anticipation of their trade deal. Earlier this month, Islamabad formally nominated Trump for the Nobel Peace Prize over his role in brokering a ceasefire between Pakistan and India after their recent conflict.
The Federal Board of Revenue (FBR) has also formally exempted foreign tech firms from a 5% tax on digitally supplied goods and services. The move coincides with Finance Minister Muhammad Aurangzeb’s visit to Washington for discussions aimed at clearing hurdles to the broader bilateral trade agreement.
Last week, during a visit to Washington where he met U.S. Secretary of State Marco Rubio, Foreign Minister Ishaq Dar signaled that the two countries were “very close” to clinching a deal.
The U.S.-Pakistan oil collaboration could have broader geopolitical ramifications, especially in a region increasingly shaped by energy diplomacy and great-power competition.
Trade Realignment
Since returning to office, Trump has aggressively pursued tariff-driven trade realignments, aimed at forcing trading partners to shift production to the U.S. or face steep duties. The administration has announced preliminary deals with Britain, Vietnam, Japan, Indonesia, the Philippines, and the E.U., with further negotiations ongoing.
U.S. and Chinese officials also met in Stockholm this week to discuss extending a trade truce set to expire on Aug. 12, though there has been no formal announcement of any agreement as yet.
The energy and trade agreements are part of Trump’s broader strategy to reassert U.S. economic dominance, while using tariffs and bilateral deals as tools to reshape global supply chains and diplomatic alignments. For Pakistan, the deal represents an opportunity to attract foreign investment in its energy sector and potentially reposition itself as a regional energy player.