Saudi Arabia ends oil supply and loan to Pakistan over Kashmir dispute

Ahmed Farooq, International Law Officer

14 Aug 2020

Saudi Arabia ended its loan and oil supply to Pakistan, due to the latter’s criticism of the Saudi-led Organization of Islamic Cooperation (OIC) failing to take a stance against India over the Indian administration of Kashmir, marking the end of the historically strong friendship between the two nations.

Pakistan has now repaid $1 billion owed to Saudi Arabia. Saudi Arabia demanded repayment of the loan after Pakistan insisted that it be allowed to spearhead the OIC’s support for Kashmir. Pakistan financed the repayment of the $1 billion loan by taking another loan from China.

The loan was part of a package announced by Saudi Arabia back in November 2018. The $6.2 billion package included $3 billion in loans and a $3.2 billion oil credit facility. The loan came at a critical time when Pakistan was experiencing a decline in foreign reserves and an expansion in trade deficits.

Read more about Saudi Arabia’s response to Pakistan’s request here: