Saudi Fund Enters Into Agreement to Fund Pakistan's Oil Requirements

The Saudi Fund for Development announced on Thursday that it had signed an agreement with Pakistan's economic affairs ministry to finance $1 billion in oil derivatives for the South Asian country.

Pakistan is in a difficult economic situation, with dwindling foreign reserves and a rapidly depreciating national currency.

International agencies downgraded the country's credit ratings as concerns grew that it would default on its financial obligations.

“Following directives from King Salman bin Abdulaziz Al Saud & Mohammed bin Salman, Mr. Sultan Al-Marshad, signed an agreement with Pakistan’s Secretary Ministry of Economic Affairs, Dr. Kazim Niaz, to finance oil derivatives worth USD 1 Billion to Pakistan,” the Saudi agency announced in a Twitter post.

Oil derivatives are financial instruments that use energy products as underlying assets, such as crude oil. They can be traded in order to gain access to their value, which is used as the contract's basis.

“The agreement aims to support the economy of Pakistan, enhance sector growth, navigate economic challenges, and build a sustainable economy,” the SFD added. “It comes as a continuation of the support provided previously in 2019 by Saudi to finance oil derivatives with a total of USD 4.4 billion.”