Saudi Arabia resumes $1.5 billion deferred oil payment facility for Pakistan

Ali Shihabi, a senior Saudi commentator on regional politics, said that “bad blood” had accumulated between Islamabad and Riyadh.

(picture-alliance/AP/H. Jamali)

Saudi Arabia has accepted to resume a deferred oil payment facility worth $1.5 billion annually for Pakistan.

The recent resumption comes as the kingdom aims to counter the Iranian influence in the South Asian country.

This was revealed by a senior government official in Islamabad to the Financial Times.

“Our ties with Saudi Arabia have improved from a downturn earlier,” the senior government official said.

Saudi Arabia to provide oil credit facility to Pakistan

“Saudi Arabia’s assistance will come via deferred payments on oil and the Saudis are looking to recommence their investment plans in Pakistan.”

Ali Shihabi, a senior Saudi commentator on regional politics, said that “bad blood” had accumulated between Islamabad and Riyadh.

Nevertheless, recent bilateral encounters had “cleared the air” and reset ties to the extent that oil credit subsidies would restart soon.

Relations between Pakistan and Saudi Arabia became sour when the former criticized the latter for not doing enough to highlight the Indian atrocities in occupied Kashmir.

The kingdom responded by forcing Pakistan to return the $3.4 billion interest-free loan it had extended to the South Asian country in 2018.

Pakistan had paid $1 billion of the loan in December 2020 and shifted to China for financial assistance.

Meanwhile, ties between the two countries appeared to ease after the Prime Minister, Imran Khan, visited Saudi Arabia in May and met with the Saudi Crown Prince, and de facto ruler, Mohammed bin Salman (MbS).

It is pertinent to note that the current Saudi offer is less than half of the previous oil facility of $3.4 billion, which was put on hold when ties frayed.

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