Pakistan Considers Buying Cheap Oil and Gas From Iran After U.S.-Iran War

Pakistan may finally be moving toward a long-discussed energy option that could reduce pressure on fuel prices: importing cheaper oil and gas from neighboring Iran.

Federal Minister for Petroleum Ali Pervez Malik said on Sunday, June 28, 2026, that Pakistan is considering importing cheaper Iranian oil and gas after the end of the Iran-U.S. conflict and the easing of restrictions on Tehran. Speaking in Lahore, he said global petroleum markets had started normalizing after the war and that the government was working on further fuel price relief for the public.

The announcement matters because Pakistan is one of the region’s most energy-import-dependent economies. A cheaper nearby supplier could help reduce import costs, stabilize domestic fuel prices, and reopen serious discussion on the long-delayed Iran-Pakistan gas pipeline.

Why Pakistan Is Looking at Iran Now

For years, Pakistan avoided formal Iranian oil and gas imports mainly because of U.S. sanctions risk. That picture changed after Washington and Tehran signed the Islamabad Memorandum of Understanding on June 17, 2026, following Pakistan-backed mediation.

Under the deal, the U.S. agreed to issue sanctions waivers for the export of Iranian crude oil, petroleum products, petrochemicals, and related services such as banking, insurance, transportation, and shipping.

The U.S. Treasury’s Office of Foreign Assets Control later issued General License X on June 22, 2026, authorizing the production, delivery, sale, and offloading of Iranian crude oil and petroleum products for a 60-day period through August 21, 2026.

That gives Pakistan a short but important window to explore legal, sanction-safe energy trade with Iran.

Could Iranian Oil Cut Petrol Prices in Pakistan?

In theory, yes — but not overnight.

Ali Pervez Malik said petroleum prices had surged sharply during the peak of Iran-U.S. tensions, with global pressures pushing prices as high as Rs 460 per litre in April before easing later. He said Prime Minister Shehbaz Sharif had already passed price relief to consumers and that the government would try to reduce prices further as global markets normalize.

Cheap Iranian oil could help Pakistan in three ways:

Lower import costs due to geographic proximity
Reduced freight and insurance costs compared with longer routes
More supplier competition, giving Pakistan better bargaining power

However, pump prices in Pakistan are not based only on crude cost. They also include exchange rate impact, refining margins, petroleum levy, dealer margins, inland freight, and government taxes. So even if Iranian oil is cheaper, consumers may see gradual relief rather than an immediate dramatic fall.

Pakistan’s Energy Dependence Makes This Urgent

Pakistan imports nearly all of its oil and remains heavily exposed to disruptions in the Strait of Hormuz, one of the world’s most important energy chokepoints. During the Iran war, Pakistan even considered expensive spot LNG purchases to manage supply disruptions and peak summer demand.

The country’s petroleum import burden is already severe. Finance Minister Muhammad Aurangzeb told the National Assembly that petroleum imports made up 22.2% of Pakistan’s total imports during July–March FY2025-26.

This is why even a modest reduction in energy import cost matters. Cheaper oil and gas can reduce pressure on the rupee, lower the current account burden, and create space for fuel price relief.

The Iran-Pakistan Gas Pipeline Is Back in Focus

Iranian gas is not a new idea. The long-delayed Iran-Pakistan pipeline was designed to supply 750 million to one billion cubic feet per day of natural gas to Pakistan for 25 years. But the project has remained stalled for years due to fears of international sanctions.

Pakistan’s Foreign Office recently said progress on economic projects with Iran will depend on the pace of sanctions relief. Foreign Office Spokesperson Tahir Andrabi said economic opening with Iran and sanctions relief must move together.

That cautious language shows Islamabad is interested — but not willing to risk penalties unless the legal path is clear.

The Main Problem: Waiver Is Temporary

The biggest challenge is that the current U.S. waiver is temporary. General License X runs only until August 21, 2026, unless extended or replaced by a broader sanctions settlement. Legal experts warn that many Iran sanctions remain in place and that long-term trade will remain risky until a final deal is reached.

There are also compliance risks linked to sanctioned Iranian entities. The waiver does not remove every restriction, and transactions involving certain designated groups remain prohibited.

For Pakistan, this means any Iranian oil or gas deal must be structured carefully through banking, insurance, shipping, and documentation channels that are clearly covered by the waiver.

Gas May Be Harder Than Oil

Oil imports can be arranged faster through cargoes and refinery contracts. Gas is more complicated.

Petroleum Minister Ali Pervez Malik recently said Iranian gas pricing is comparable to Qatari LNG, but Pakistan would need to spend billions of dollars on pipeline infrastructure. He noted that Pakistan already has developed LNG import infrastructure, making Qatari LNG easier to use in the short term.

That means Iranian crude or petroleum products may come first, while pipeline gas remains a longer-term project requiring financing, legal settlement, and construction.

What Pakistan Should Do Next

Pakistan should move quickly but carefully.

The government needs to:

Seek written legal clarity from Washington on permitted Iranian energy transactions
Start government-to-government talks with Tehran on crude, LPG, and gas pricing
Explore barter or local-currency settlement options if allowed
Protect local refineries by testing crude compatibility first
Revive the Iran-Pakistan pipeline only after long-term sanctions clarity
Ensure any savings are passed to consumers, not lost in taxes and margins

Bottom Line

Pakistan’s interest in cheap Iranian oil and gas is economically logical. Iran is nearby, energy-rich, and now temporarily open for legal oil trade under a U.S. waiver.

But the opportunity is time-sensitive. The current sanctions relief runs for only 60 days, and a permanent energy deal will depend on whether the U.S.-Iran peace process survives.

If Pakistan acts smartly, Iranian energy could reduce import pressure and help bring fuel prices down. If it waits too long, the window may close again.