U.S. strikes energy pact with Pakistan, snubs India with tariff and taunt
President Donald Trump announces a major US.-Pakistan energy deal while slapping India with fresh tariffs and calling its economy ‘dead’
MNTV News Desk Analysis
NEW DELHI/ISLAMABAD (MNTV) – In a move that could alter regional geopolitics and energy equations in South Asia, U.S. President Donald Trump has announced a new trade and energy partnership with Pakistan—just hours after imposing a steep 25 percent tariff on Indian exports and ridiculing India’s economic ties with Russia.
Calling Pakistan’s oil potential “massive,” Trump said the deal would pave the way for joint exploration and development of the country’s long-untapped reserves, and even quipped that Islamabad might someday sell oil to its archrival, India.
“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,” Trump posted on his social media platform, Truth Social.
“We are in the process of choosing the oil company that will lead this partnership. Who knows, maybe they’ll be selling oil to India someday!”
The agreement—whose full terms remain undisclosed—comes at a time when Islamabad is seeking fresh economic lifelines and strategic relevance, while Washington is recalibrating trade ties in Asia amid its broader competition with China and ongoing sanctions against Russia.
Just a day before this announcement, Trump had imposed a 25% “reciprocal” tariff on India, accusing New Delhi of unfair trade practices and ignoring U.S. sanctions on Russia. Trump also warned of an additional “penalty” over India’s continued purchase of Russian oil and weapons.
“I don’t care what India does with Russia,” Trump posted. “They can take their dead economies down together, for all I care.”
The sharp rebuke stunned policymakers in New Delhi, where Commerce Minister Piyush Goyal confirmed that the government was examining the implications of the move.
Addressing Parliament on Thursday, Goyal said, “We will take all necessary steps to secure and advance our national interest. We’ve gone from being a ‘fragile five’ economy to the fifth-largest, and soon to be third. We will not be derailed.”
Goyal highlighted ongoing negotiations with the U.S. to finalise a mutually beneficial trade agreement, with five rounds of discussions held since March. India, he emphasized, is committed to inclusive growth and expanding its manufacturing and export base.
Pakistan Deal: Oil, Trade and strategic shift
While India fumes, Islamabad is celebrating. On Wednesday night, Pakistan and the U.S. finalised a broader trade agreement aimed at boosting bilateral trade, expanding market access, and fostering cooperation in sectors like energy, technology, mining, and cryptocurrency.
Pakistan’s Finance Minister Muhammad Aurangzeb, currently in Washington, hailed the deal as a “win-win” moment. “This marks the culmination of a journey we began months ago,” he said in a video statement. “Trade and investment must go hand in hand.”
The deal is expected to lower tariffs—though specific figures were not disclosed—and attract U.S. investment into Pakistan’s oil and gas sector, particularly in underdeveloped areas such as Balochistan and Khyber Pakhtunkhwa. The Pakistani embassy in Washington called it “a new era of economic collaboration.”
Prime Minister Shehbaz Sharif publicly thanked Trump for what he termed a “historic” agreement, adding that it will “expand the frontiers of our enduring partnership.”
Foreign Minister Ishaq Dar also confirmed the deal Thursday morning, though he refrained from sharing details.
Trump’s declaration of Pakistan’s “massive” oil potential is not unfounded.
According to the U.S. Energy Information Administration, Pakistan holds around 353 million barrels of proven oil reserves and produces roughly 60,000 barrels per day. But the country also imports over $12 billion in oil annually.
Experts suggest Pakistan’s true potential may lie offshore and in tribal districts along the Afghan border—areas that remain underexplored due to security and financial constraints.
Muhammad Iqbal Jawaid, a Karachi-based oil industry analyst, called the deal “encouraging.”
“Pakistan enjoys a huge untapped potential for oil and gas, but it requires massive resources that we don’t have,” he told Turkish news agency Anadolu.
“If the U.S. comes into the picture, it could lead to a major breakthrough.”
Wasi Khan, another expert in Pakistan’s energy sector, echoed that sentiment. “Greater international cooperation can bring investment, technology, and healthy competition. But we need infrastructure and security guarantees.”
Khan added that offshore areas could be particularly promising. “They are free from law-and-order issues, and represent a significantly underexplored frontier.”
While optimism is high, the deal also highlights longstanding issues that have hampered Pakistan’s energy ambitions: instability and insurgency.
The provinces of Balochistan and Khyber Pakhtunkhwa, along with tribal regions like South and North Waziristan, are known for their resource wealth—but also for violence and unrest.
For decades, these areas have been battlegrounds for militants, including the Tehreek-e-Taliban Pakistan (TTP) and Baloch separatist groups. These security threats have discouraged international investors and complicated exploration efforts.
Even local experts like Jawaid admit that “without improving law and order, attracting international investment in the energy sector will remain a challenge.”
These challenges are not lost on Pakistani opposition leaders. Former Senate chairman Mian Raza Rabbani criticized the government for failing to involve Parliament.
“It’s a sad day when the people of Pakistan learn about such a crucial deal through a tweet by the U.S. president,” Rabbani said. “Article 172 of our Constitution clearly states that provinces have 50 percent ownership of minerals. The federal government must take provinces and Parliament into confidence.”
Geopolitical implications: Tilt toward Islamabad?
The deal also signals a possible strategic pivot. By bringing Pakistan into a major energy partnership, the U.S. could be counterbalancing India’s increasing assertiveness in buying Russian oil—and its growing trade ties with China and Gulf nations.
Pakistan, designated a “major non-NATO ally” by the U.S., has long sought greater economic integration with the West. For Washington, the deal offers a twofold advantage: economic engagement and geopolitical leverage in a region where China’s Belt and Road Initiative, including the China-Pakistan Economic Corridor (CPEC), has steadily expanded.
Trump’s shot at India may also serve as a warning: align with U.S. sanctions and economic expectations—or face penalties.
Yet, many economists warn that this approach—linking geopolitics directly to trade penalties—risks destabilising global supply chains and damaging alliances.
Pakistan’s trade with the U.S. totalled $7.3 billion in 2024, with a goods trade deficit of $3 billion. Under the new agreement, Pakistani officials hope to reverse that imbalance and gain preferential access to the American market.
Aurangzeb praised the role of the private sector in pushing for the deal, calling it “instrumental” in identifying investment opportunities and resolving non-tariff barriers.
He also cited historical parallels. “Much like how U.S. companies helped create Saudi Aramco, this partnership could trigger a transformation in Pakistan’s energy sector.”
According to one past U.S. Energy Department assessment, Pakistan may hold up to 9 billion barrels of technically recoverable shale oil. Tapping even a fraction of that could redefine the country’s economic trajectory.
With the announcement of the U.S.-Pakistan oil deal and simultaneous escalation with India, Trump has once again disrupted the South Asian trade and diplomatic equation.
For Pakistan, the agreement could offer a much-needed economic lifeline—if it can manage the security risks and deliver on transparency and infrastructure.
For India, it is a warning shot from Washington, wrapped in the politics of sanctions and energy security.
Whether this turns into a transformative chapter or another unrealised promise remains to be seen. But for now, the world is watching closely as two nuclear-armed neighbours face very different versions of America’s trade diplomacy.
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