Saudi Arabia concludes 'anti-Iran' oil agreement with Pakistan

Saudi Arabia concludes 'anti-Iran' oil agreement with Pakistan
The assistance is to be valued at $1.5 billion or more per year, figures in Pakistan have reportedly said.
2 min read
21 June, 2021
Difficulties between the two sides have reduced of late [GIUSEPPE CACACE/AFP/Getty-file photo]

Pakistan will again receive oil assistance from Saudi Arabia as the kingdom attempts to reduce Iran's influence in the region, according to reports.

The assistance will re-start in July and is to be valued at $1.5 billion or more per year, figures in Pakistan have said, according to the Financial Times.

Saudi Arabia insisted that Islamabad return a loan of $3 billion in 2020 following attempted pressure on Riyadh to speak out against India's revoking of disputed Kashmir's long-standing autonomous status.

However, tensions have calmed following Pakistani Prime Minister Imran Khan's visit to the kingdom last month, where he met de facto ruler Mohammed bin Salman, the crown prince.

A top figure in Pakistan noted: "Our relations with Saudi Arabia have recovered from [their decline] earlier.

"Saudi Arabia's support will come through deferred payments [relating to oil] and the Saudis are looking to resume their investment plans in Pakistan."

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Despite this, Riyadh's support is not even 50 percent of the assistance that Islamabad previously received before it was paused.

Pakistan-based Ismail Iqbal Securities equity research chief Fahad Rauf explained: "Any amount of dollars helps because time and time again we face a current account crisis.

"And with these prices north of $70 a barrel anything helps."

Pakistan expert Ahmed Rashid suggested many considerations could have encouraged Saudi Arabia to return to its arrangement.

He said this could, to some degree, be associated with a US desire for military bases for anti-terror operations in Pakistan and neighbouring Afghanistan.

However, he said the agreement was chiefly about preventing Pakistan from aligning with Iran.

Islamabad previously moved towards Iran and another of Riyadh's adversaries, Turkey. The Pakistani premier maintains a robust relationship with Turkey's President Recep Tayyip Erdogan.

This energy agreement occurs amid alleged Saudi attempts to form an anti-Iran bloc including the US and neighbouring Qatar, according to FT.

Doha previously faced a blockade from the kingdom and its allies, including the UAE, starting in 2017 and ending this January.

Just on Monday, Saudi Arabia's new ambassador to Qatar began his role, a further sign of improved relations between the two sides.