Trump’s Oil Deal With Pakistan
How Trump's Trade Agreement and Tariffs Affect India-Pakistan Relations
Explore the implications of Trump's oil deal with Pakistan amid increasing tariffs on India. Uncover the strategic manoeuvres aimed at altering energy dynamics in South Asia and the U.S.'s efforts to influence India's energy policies.
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| Pakistan carrying the US without oil |
On July 30, 2025, US President Donald Trump announced a trade agreement with Pakistan to jointly develop what he termed the country’s “massive oil reserves.” He noted that the United States was in the process of selecting a lead oil company for this partnership and quipped that “maybe they’ll be selling oil to India some day!”
Donald Trump's recent actions have significantly altered the geopolitical landscape in the region. By imposing a 25% reciprocal tariff on India and penalising it for buying Russian oil and weapons, while simultaneously signing an oil trade deal with Pakistan, Trump has made a strategic move. This move is designed to pressure India to reduce its reliance on Russian crude and increase its oil imports from the US. The deal involves the US assisting Pakistan in developing its oil reserves, a move that could strengthen India's regional rival.
Despite Pakistan's significantly smaller proven oil reserves compared to India, the US-Pak collaboration could have a significant impact on India's diversification efforts and future oil negotiations with America. The geopolitical implications of these actions underscore the tensions in US-India relations, particularly as India continues to import Russian oil despite sanctions.
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| Aircraft fuel will be more dear |
- Donald Trump imposed tariffs on India and signed an oil deal with Pakistan, aiming to pressure India to stop buying Russian crude.
- Despite Pakistan's significantly smaller oil reserves compared to India, the US-Pak partnership could strengthen Pakistan's economy and political standing, offering a glimmer of hope for the region's future.
- The US-Pak oil deal is not just a transaction, but a strategic move with far-reaching implications, aiming to influence India's energy policies and reduce its reliance on Russia, a fact that cannot be overlooked.
- India's larger proven oil reserves and higher production capacity are significant, but its growing demand makes imports crucial, underlining the importance of India's oil imports in the global energy landscape.
- Geopolitical instability in Pakistan raises concerns about the feasibility of large-scale oil development.
Tariffs and “Russian Penalty” on India
Hours before unveiling the Pakistan deal, Trump imposed a 25 % tariff on Indian goods effective August 1. He warned of an additional, unspecified penalty on India for its purchases of Russian energy and military equipment, casting India’s trade ties with Moscow as a liability in Washington’s eyes.
Geopolitical Implications
A Clear Pressure Tactic
The sequence—tariffs on India followed by an oil pact with its rival—signals a stark message from Washington to New Delhi:
“Toe the line on US priorities or risk your adversary gaining strength.”
India’s energy and defence dealings with Russia are now framed as grounds for economic penalties.
Offering Pakistan potential US-backed oil exports underscores US leverage in South Asia’s rivalries.
Pakistan’s Strategic Leverage
Despite Pakistan’s limited proven reserves (about 353 million barrels, compared to India’s 4.8 billion barrels) and modest refining capacity, the symbolic partnership serves multiple US goals:
Boosting Islamabad’s economic ties with Washington to counter Chinese influence.
Applying additional pressure on India’s energy diversification—nudging it toward American suppliers.
Elevating Pakistan’s diplomatic standing by portraying it as a “major non-NATO ally” reaping tangible US benefits.
India–Russia Energy Partnership
India’s surge in Russian crude imports (from near 0 % before 2022 to roughly 35–40 % by mid-2025) underpins its energy security but irks Washington:
Bilateral oil trade hit a record $68.7 billion in FY25, a six-fold increase since before the Ukraine war.
Russia remains India’s top arms supplier, reinforcing strategic ties beyond energy.
US pressure aims to erode these links by threatening tariffs and promoting alternative suppliers.
What to Watch Next
- US–India Trade Talks: Will Washington soften its tariff stance if New Delhi makes concessions on defence procurement or energy sourcing?
- India’s Diversification Strategy: Expansion of imports from the Middle East, the US, and domestic renewable capacity could buffer against further US penalties.
- Pakistan’s Oil Development: Commercial exploration will test whether the US–Pak pact yields more than diplomatic symbolism.
- Excellent Power Dynamics: How China—watching its South Asian rival court Washington—will respond to a closer US-Pakistan tie will shape the broader Indo-Pacific balance.
Trump Pakistan oil deal
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