The first oil imported from the USA has reached Pakistan as Pakistan works on balancing out its trade surplus with the USA in the least painful way. It leaves the USA increasing its exports marginally with the sale of a primary product instead of the manufactured goods it seems it is no longer able to sell to the world. The transaction is largely revenue-neutral, for the US oil, being imported at an international price, is going to be imported anyhow, so it merely means that the oil will not be imported from a more usual source. That source so far has been the Gulf, and as all the Gulf states are US allies, none will dial down ties with Pakistan because of this. One complication was highlighted when Saudi Arabia renewed the oil credit facility along with the rollover of its $5 billion in bank deposits. American oil companies will expect payment in cash, because the purpose is not to give Pakistan aid, but to reduce its trade surplus.
Oil is obviously of great interest to US President Donald J. Trump, whose tariffs Pakistan is trying to reduce by importing from the USA. He, after all, is the originator of the slogan, “drill, baby, drill” with which he reversed the bans on drilling imposed because of their being behind climate change, which he described as a ‘con job’ to the UN. He is also bent on getting India to stop buying discounted Russian oil, because of which he had imposed a 50 percent tariff on India. Because of the profits to be thus made, Indian importers are selling the discounted oil on the world market at current prices. Pakistan is perhaps lucky not to have buy Russian oil, but did not because it could not be refined. Mr Trump also predicted US investment in the Pakistani petroleum sector, once again evincing a deep interest in the sector.
Pakistan’s relationship with the USA was once defined in geostrategic terms, but now is defined in geoeconomic ones. There are the traditional avenues, such as oil and textiles, but new ones are opening, such as the US venture capital firm that wishes to spread stable coin in Pakistan. There are other opportunities opening up, with even a forecast that the USA might sell Pakistan arms. Though that might reflect a return to geostrategic considerations, it does have economic implications favouring the USA. Under those circumstances, the oil import will prove crucial.
