This fall of 38% over one year comes after a decline of 19.25% in the first quarter.

"The decrease mainly reflects the impact of lower crude oil prices and weaker refining and chemical margins," Aramco, which is 90 percent owned by the Saudi state, said in a statement.

"Our strong results reflect our resilience and ability to adapt to market cycles," Aramco CEO Amin Nasser said.

"With the expected recovery of the global economy and increased activity in the aviation sector, continued investment in energy projects will be necessary to safeguard energy security," he added.

"For our shareholders, we intend to start distributing our first performance-related dividend in the third quarter," he said.

Aramco, like other behemoths in the sector, had posted record profits last year with the surge in oil prices linked to Russia's invasion of Ukraine in February 2022, but also to the post-Covid economic recovery.

In recent months, oil prices have been weighed down in particular by the risk of recession around the world, which weighs on the outlook for demand.

However, crude oil prices have risen slightly in recent days due to the slowdown in inflation in the United States but also to the strategy of reducing production put in place by exporting countries, led by Saudi Arabia.

'Defending oil prices'

The world's largest crude exporter, the kingdom announced in April a production cut of 500,000 barrels per day (bpd), as part of a coordinated action with other oil powers to boost prices.

Analysts estimate that Saudi Arabia needs an oil price of around $80 a barrel to balance its budget. It was only during July that averages exceeded this threshold, a sign that recent supply declines are beginning to have the desired effect.

The tower of the oil giant Aramco in the finance district of Riyadh. Photo taken on April 16, 2023 © Fayez Nureldine / AFP

The cuts "show how far the kingdom will go to defend oil prices, as the collapse of its commodity market hurts its ambitious economic diversification efforts," said Herman Wang, an analyst at S&P Global Commodity Insights.

Aramco is undertaking investments to increase its production capacity to 13 million bpd by 2027.

Aramco's profits are the main source of revenue from Crown Prince Mohammed bin Salman's sweeping economic and social reform program, known as Vision 2030, aimed precisely at diversifying its economy, which is largely dependent on fossil fuels.

The jewel of the Saudi economy, Aramco posted record profits of $161.1 billion in 2022, allowing the kingdom to post its first annual budget surplus in nearly a decade.

These were "phenomenal results due to a very particular set of geopolitical factors," said Jamie Ingram, editor of the Middle East Economic Study.

"Higher incomes would of course be desired by (Saudi) officials, but Saudi Arabia still has very low debt levels and large reserves from which it can draw," he added.

In December 2019, Aramco listed 1.7% of its shares on the Saudi Stock Exchange, raising $29.4 billion.

In mid-April, Saudi Arabia announced it was transferring 4 percent of Aramco's shares, worth nearly $80 billion, to Sanabil Investments, a company controlled by the kingdom's Public Investment Fund (PIF), one of the world's largest sovereign wealth funds with more than $620 billion in assets.

© 2023 AFP