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Oil firm Saudi Aramco on Monday announced profits of $30.08 billion for the second quarter, a sharp fall from the same period last year when prices surged after Russia invaded Ukraine.
The 38 per cent year-on-year decline "mainly reflected the impact of lower crude oil prices and weakening refining and chemicals margins," the largely state-owned company said in a statement published on the Saudi stock exchange.
The decline followed a drop of 19.25 per cent in the first quarter.
"Our strong results reflect our resilience and ability to adapt through market cycles," CEO Amin Nasser said.
"We continue to demonstrate our long-standing ability to meet the needs of customers around the world with high levels of reliability. For our shareholders, we intend to start distributing our first performance-linked dividend in the third quarter.”
Production from the world's biggest crude exporter was down after Riyadh in April announced cuts of 500,000 barrels per day, part of a coordinated move with other oil powers to slash supply by more than one million bpd in a bid to prop up prices.
In June, the Saudi energy ministry announced a further voluntary cut of one million bpd which took effect in July and has been extended through September.
The kingdom's daily production is now approximately nine million bpd, far below its reported daily capacity of 12 million bpd.
Saudi Arabia is counting on high oil prices to fund a sweeping reform agenda known as Vision 2030 that aims to shift its economy away from fossil fuels.
Analysts say the kingdom needs oil to be priced at around $80 per barrel to balance its budget.
Prices are now above that threshold, a sign that the recent supply cuts are starting to have the desired effect.
The cuts "show the lengths to which the kingdom will go to defend oil prices, as a slumping market for its lifeblood commodity is damaging to its ambitious economic diversification efforts," said Herman Wang, associate director for oil news at S&P Global Commodity Insights.
Aramco is undertaking investments to ramp up national production capacity to 13 million bpd by 2027.
"It's an expensive proposition for Aramco to hold production capacity offline in the name of OPEC+ cuts, but the hope is that the sacrifice being made now will pay off in the end with higher prices," Wang said.
Aramco reported record profits totalling $161.1 billion last year, allowing the kingdom to notch up its first annual budget surplus in nearly a decade.
Saudi Arabia owns 90 per cent of Aramco's shares.
In December 2019, the firm floated 1.7 per cent of its shares on the Saudi bourse, generating $29.4 billion.
