Pakistan asks Saudi Arabia to extend $1.2 billion oil credit deal

Pakistan has requested Saudi Arabia to extend its deferred oil payment facility by one year and increase the credit period from one year to two years, aiming to ease pressure on the country’s balance of payments, officials familiar with the matter said.

Talks are currently underway between Pakistan’s economic team and Saudi authorities following the government’s request, the sources said.

Under the existing arrangement, Pakistan imports oil from Saudi Arabia on deferred payments, a facility that is scheduled to expire in March 2026. By the end of the current month, the agreement — valued at $1.2 billion — will complete its tenure, according to the sources.

Pakistan is required to begin repayment of the deferred amount from March 2026 under the current terms. Officials say extending the agreement’s duration to two years would make repayment more manageable and provide continued relief to the country’s external financing needs.

The deferred oil payment facility is designed to reduce pressure on Pakistan’s external payments by allowing oil imports without immediate cash outflows, the sources said.

If a new agreement is finalized, the facility could remain in place until February 2027, providing Pakistan with additional breathing space amid ongoing economic challenges.