KARACHI: Pakistan could save up to $340 million annually on crude oil imports and revive bilateral trade with Iran if international sanctions on Tehran are lifted, according to a research note released by Topline Securities on Thursday.
The brokerage said Pakistan and Iran had historically maintained strong bilateral trade before sanctions were tightened in 2012, with total trade peaking at more than $1.2 billion in FY10. Pakistan remained in a trade deficit with Iran until FY11, with the deficit widening to $813 million in FY10 due to higher fuel imports.
As sanctions intensified, imports from Iran declined sharply, allowing Pakistan’s trade balance to turn positive in FY12 and reach a surplus of $73 million in FY13. Since then, bilateral trade through formal channels has weakened and is currently nil, the report said.
Topline noted that Pakistan exported a diversified range of agricultural products, textiles and pharmaceuticals to Iran between FY09 and FY13. Rice was the largest export category, with annual exports reaching approximately $285 million, followed by oranges, mangoes, dates and apricots. Textile products, pharmaceutical and surgical equipment, footballs and cruise ships were also among Pakistan’s exports.
On the import side, Pakistan primarily sourced fuels and industrial raw materials from Iran during the same period. Fuel imports exceeded $570 million at their peak, while coal, hot-rolled coils (HRC), iron and steel scrap, and other industrial materials were also imported.
Looking ahead, the report said Pakistan and Iran had committed to targeting potential trade flows of $10 billion by operationalising Special Economic Zones (SEZs) in border areas and deepening economic engagement.
Topline said Pakistan could materially benefit from importing Iranian energy through a Preferential Trade Agreement or Free Trade Agreement if sanctions are lifted.The report said Iran continued to import products that Pakistan has traditionally exported. If formal trade channels resume, Pakistan would be well-positioned to compete in these sectors while benefiting from lower freight costs and greater export diversification.
The report also highlighted potential import savings. Pakistan imported nearly $17 billion worth of petroleum products and fuels in 2025. Historically, Iranian crude was imported at discounts of 13-17 per cent relative to supplies from Saudi Arabia and the UAE during FY09-12, according to Topline’s analysis. Based on current reported prices, Iranian Light and Iranian Heavy crude grades also remain cheaper than comparable Saudi grades.
Assuming Pakistan sources 10-20 per cent of its petroleum requirements from Iran at a 10 per cent discount, including freight savings, the country could save between $170 million and $340 million annually, the report estimated. It added that Pakistan Refinery Limited (PRL) and Bosicor, now Cynergico, had historically imported Iranian crude.
The report said Pakistan could also benefit from cheaper imports of steel and industrial raw materials over the longer term. During FY10, HRC imported from Iran was, on average, around 16 per cent cheaper than comparable imports from China and South Africa.
However, recent war-related disruptions at Iran’s largest steel mills could alter short-term trade dynamics as Iran prioritises domestic consumption and reconstruction, potentially creating opportunities for Pakistan’s steel exporters.
Once Iran’s production capacity normalises, Pakistan could again benefit from lower-priced steel imports. Based on Pakistan’s HRC import bill of approximately $1.3 billion in 2025, sourcing 10-20 per cent of requirements from Iran could generate import savings of up to $21-42 million if historical discounts persist, the report said.
Topline also noted that Iran had recently expressed interest in sourcing up to 60 per cent of its meat imports from Pakistan. Pakistan’s highest meat exports to Iran were recorded in FY12 at over $27 million. The brokerage said listed companies TOMCL and ASC could potentially benefit from progress in this area.
On the proposed Iran-Pakistan gas pipeline, Topline said the project was likely to remain on hold for several more years despite any easing of sanctions.The report noted that although Iran had completed its side of the pipeline, the project had remained stalled for more than a decade, largely because of sanctions.
According to the brokerage, Pakistan’s current surplus gas supply, following long-term LNG import agreements with Qatar and increased domestic exploration and production, reduces the commercial attractiveness of another long-term gas supply agreement.
The report said gas under the original pipeline agreement would cost roughly $9.5-10.8 per million British thermal units (mmbtu) at Brent crude prices of $70-80 per barrel, compared with approximately $8.3-9.4 per mmbtu under Qatar LNG contracts. It added that local exploration and production companies currently receive around $5-6 per mmbtu under Pakistan’s 2012 petroleum policy.
Topline said any meaningful revival of the project would require not only the easing of sanctions but also a complete restructuring of the agreement, including lower gas volumes and more favourable pricing.
The brokerage added that Pakistan remains committed to importing RLNG from Qatar until 2031, suggesting that any progress on the Iran-Pakistan pipeline, if sanctions are lifted, is more likely to begin towards the end of that contract period.
