The biggest oil producer of the world Saudi Arabia has stopped supply of oil to Pakistan as a deal signed between the two close allies for provision of $3.2 billion worth of the fuel under the arrangement expired two months ago.

Pakistan has not received oil on deferred payments from Saudi since May and the latter is yet to renew an agreement with Pakistan.

The USD 3.2 billion Saudi oil facility was part of the USD 6.2-billion Saudi Arabian package announced in November 2018 to ease Pakistan's external sector woes, the Express Tribune reported on Friday.
The agreement expired in May and efforts are underway to renew the facility, Petroleum Division spokesperson Sajid Qazi was quoted as saying by the paper.

Pakistan is awaiting a response from the Saudi government over its request to further extend the facility, he added.

“Pakistan has already prematurely returned $1 billion Saudi loan - four months ahead of its repayment period. Pakistan could also return $2 billion remaining Saudi cash loan, subject to availability of similar facility from China.

The agreement over $3 billion cash support and $3.2 billion oil facility per annum had the provision of renewal for two more years…Saudi Arabia has not provided the oil on deferred payments since May this year,” according to The Express Tribune.

The budget estimates suggested that the Pakistan government was hoping to receive minimum $1 billion worth of oil in the fiscal year 2020-21, which started in July.

A Pak oil ministry spokesman said that the response from the Saudi Arabian government was awaited over Pakistan’s request to further extend the facility, in line with the provision of the agreement.

The development comes at a time when Pakistan faces a challenging situation as its IMF programme also remains technically suspended for the last five months.


Saudi had rolled over its USD 3 billion loan from between November 2019 and January 2020. The International Monetary Fund (IMF) has termed the rollovers of Saudi Arabian, United Arab Emirates (UAE) and Chinese assistance critical for Pakistan’s debt sustainability.

Pakistan’s repayment of USD 1 billion Saudi Arabian loan after borrowing from China and expiry of the oil facility underscores challenging relations between two Islamic nations, the report noted.

(With agency inputs)