Report says Pakistan could save millions if Iranian oil trade resumes

Pakistan could reduce its annual import costs by as much as 340 million dollars if international sanctions on Iran are lifted and crude oil imports from the neighboring country resume.

Pakistan could reduce its annual import costs by as much as 340 million dollars if international sanctions on Iran are lifted and crude oil imports from the neighboring country resume, according to a new report by Topline Securities. The study suggests that renewed trade with Iran would lower Pakistan’s energy expenses while creating new opportunities for business between the two countries.

The report, titled Pakistan Strategy. What If Iran Sanctions Are Lifted. Implications for Pakistan from a Historical Perspective, examines how improved economic ties with Iran could benefit Pakistan. Analysts say restoring formal trade would help reduce the country’s import bill, strengthen cross border commerce, and improve access to lower priced energy supplies.

Before stricter international sanctions were imposed on Iran in 2012, trade between Pakistan and Iran exceeded 1.2 billion dollars during the 2010 fiscal year. At that time, Pakistan imported significant amounts of fuel from Iran, resulting in a trade deficit that reached 813 million dollars. However, as sanctions tightened, imports from Iran declined sharply and formal trade between the two countries gradually came to a halt.

During the years before sanctions, Pakistan exported products such as rice, maize, fruits, vegetables, textiles, pharmaceuticals, surgical instruments, and sports goods to Iran. In return, it imported crude oil, coal, iron and steel products, hot rolled steel, and other industrial raw materials that supported local manufacturing.

The report notes that both Pakistan and Iran have already expressed a desire to expand bilateral trade to 10 billion dollars in the future. This goal could be achieved through greater economic cooperation and the establishment of Special Economic Zones along the shared border, provided international restrictions are removed.

Pakistan’s heavy dependence on imported fuel makes cheaper energy supplies particularly important. The country imported nearly 17 billion dollars worth of petroleum products and fuels during 2025. According to the report, Iranian crude oil was historically priced between 13 and 17 percent lower than similar imports from Saudi Arabia and the United Arab Emirates before sanctions were imposed. Even today, Iranian crude continues to trade at slightly lower prices than comparable Saudi oil in international markets.

Analysts estimate that if Pakistan imports between 10 and 20 percent of its petroleum needs from Iran at a discount of around 10 percent, including lower transportation costs because of geographical proximity, the country could save between 170 million and 340 million dollars every year.

The report also points to potential savings in industrial imports. Pakistan spent around 4 billion dollars on iron and steel products in 2025. Historically, hot rolled steel imported from Iran was about 16 percent cheaper than supplies from countries such as China and South Africa. If Pakistan purchases 10 to 20 percent of its hot rolled steel requirements from Iran under similar pricing conditions, annual savings could range from 21 million to 42 million dollars.

Beyond imports, Pakistan could also benefit from increased exports. The report notes that Iran has recently shown interest in importing up to 60 percent of its meat requirements from Pakistan, creating another potential market for Pakistani producers if trade relations improve.

Meanwhile, Minister for National Food Security and Research Rana Tanveer Hussain recently said the government would consider importing Iranian oil if United States sanctions on Tehran are lifted. He added that improved regional stability and the restoration of trade with Iran could have a positive impact on Pakistan’s economy and open new opportunities for economic growth.