Pakistan has formally reopened its offshore oil and gas exploration sector after nearly 20 years, a significant step toward boosting domestic energy resources and attracting investment.

The government has signed Production Sharing Agreements (PSAs) and Exploration Licences (ELs) for the 23 offshore blocks awarded under the Offshore Bid Round 2025. Federal Petroleum Minister Ali Pervaiz Malik was present at the signing event.

The officials said the bid round encompassed over 54,600 square kilometres in the Indus and Makran offshore basins along the coastal waters of Sindh and Balochistan.

The Ministry of Petroleum said two blocks were awarded earlier in December 2025, while the remaining 21 agreements have now been concluded, completing the full offshore licensing structure.

Officials said the achievement was an important milestone to spur offshore exploration, increase international and local investment and reduce dependence on imported energy.

The government said the potential of Pakistan’s offshore area is around 282,623 square kilometers and only a few exploration wells had been completed since independence.

Companies will first conduct geological and geophysical research, including seismic data collecting and interpretation in Phase-I under the new framework. If the results are positive, exploratory drilling will follow in Phase-II.

Mari Energies was the biggest stakeholder among participating corporations, however significant national energy companies also won several blocks.

The government forecasts the initial investment at about $82 million, rising to almost $1 billion if drilling moves to the advanced exploration stages.

 Oil prices extended gains on Monday as efforts to end the U.S.-Israeli war on Iran appeared to have stalled, after a nuclear power plant in the United Arab Emirates came under attack and as U.S. ​President Donald Trump is expected to discuss military options on Iran.

Brent crude futures climbed $2.03, or 1.86%, ​to $111.29 a barrel by 0220 GMT, after touching $112 earlier, the highest since May 5.

U.S. West ⁠Texas Intermediate crude was at $107.73 a barrel, up $2.31, or 2.19%, following a rise to $108.70, its highest level since April ​30. The front-month June contract expires on Tuesday.

Both contracts gained more than 7% last week as hopes ​of a peace deal that would end ship attacks and seizures around the Strait of Hormuz dimmed. Last week’s talks between Trump and Chinese President Xi Jinping ended without an indication from the world’s top oil importer that it ​would help resolve the conflict.

“The longer the conflict with Iran persists, the greater the risk of protracted ​oil price scarring, which could keep interest rates higher for longer,” Prestige Economics’ Jason Schenker said in a note.

“This ‌could ⁠also present persistent downside risks to growth.”

Drone attacks on the UAE and Saudi Arabia and rhetoric from the U.S. and Iran raised concerns of an escalation in the conflict.

Emirati officials said they were investigating the source of the strike on the Barakah nuclear power plant and that the UAE had the full right ​to respond to such “terrorist ​attacks.”

Saudi Arabia, which intercepted ⁠three drones that entered from Iraqi airspace, warned it would take the necessary operational measures to respond to any attempt to violate its sovereignty and security.

“These ​drone strikes are a pointed warning – renewed U.S. or Israeli strikes on ​Iran could trigger ⁠more proxy attacks on Gulf energy and critical infrastructure by Iran or its regional proxies,” IG market analyst Tony Sycamore said.

Trump is expected to meet top national security advisers on Tuesday to discuss options for ⁠military action ​regarding Iran, Axios reported.

Separately, in a move that could support oil ​prices, the Trump administration on Saturday allowed a sanctions waiver to lapse that had previously allowed countries including India to buy Russian seaborne ​oil after a month-long extension.

On Monday, the benchmark index fell below 165,000 points on the Pakistan Stock Exchange (PSX).

After closing at 165,596, the KSE-100 index fell more than 1,200 points to 164,276.

Rising geopolitical tensions, particularly US President Donald Trump’s threats of military action against Iran, damage investor sentiment, according to analysts.

Japan’s Nikkei fell 1%, Indonesia’s Jakarta Composite Index down 2%, and Hong Kong’s Hang Seng Index fell 1.5%. South Korea’s KOSPI rose, while China’s Shanghai Composite fell.

Increasing Middle East tensions and global oil and financial sector uncertainties prompted investor caution and the regional market decline.