Saudi Arabia's War-Fuelled Oil Revenue Cuts Q2 Budget Deficit by Three-Quarters
Oil revenues boosted by a conflict-driven price surge narrowed Saudi Arabia's quarterly shortfall sharply, while state shipper Bahri posted a 574% year-on-year profit record.
Saudi Arabia's quarterly budget deficit shrank to 34.3 billion riyals, or $9.1 billion, in the three months through June, the finance ministry said Thursday (2026-07-30), down from 125.7 billion riyals in the first quarter. The compression of nearly three-quarters in a single quarter reverses what had been the kingdom's deepest economic contraction since the pandemic.6
Oil revenue climbed 28% from the first quarter as crude prices jumped following the regional conflict, while government spending fell 3.5%, the ministry said. ICE Brent crude front-month was at $90.15 a barrel as of Wednesday (2026-07-29). The same war that initially hammered Saudi oil export capacity sent per-barrel revenue sharply higher in the months that followed.6
The freight side of the Saudi oil economy captured the same upswing. Bahri, the National Shipping Company of Saudi Arabia, said on Wednesday (2026-07-29) it set a company profit record with SAR 2.75 billion ($731.9 million) in second-quarter net income, up 574% year-on-year. Higher freight rates and expanded shipping activity drove the result as Gulf cargo lanes gradually reopened.5
First-half net income came in at SAR 4.9 billion, up 421% against the same period in 2025. Second-quarter revenue rose 156% year-on-year to SAR 6.31 billion; first-half revenue climbed 144% to SAR 11.27 billion. Operating cash flow for January through June 2026 grew 235% year-on-year to SAR 3.87 billion, Bahri reported. Net debt fell 34% year-on-year to SAR 6.62 billion, cutting the net debt-to-EBITDA ratio to 0.72x at end-June 2026 from 2.19x a year earlier.5
Export volumes are recovering from a heavily disrupted base. Bloomberg tanker-tracking data showed Saudi crude shipments running at 6.3 million barrels a day in the six days through Wednesday (2026-07-01), roughly in line with the 2025 annual average and approaching 90% of February output before the Iran conflict disrupted Persian Gulf loadings. June flows had run at approximately 4.45 million barrels a day. The jump followed the resumption of Persian Gulf cargo loadings after an interim US-Iran peace deal.3
South Korea has direct exposure to the Saudi recovery. Korea Electric Power Corp. (KEPCO), the state-run utility, won a $1.4-billion contract in June (2026-06-04) to build and operate Phase 2 of Aramco's Jafurah cogeneration power plant at the kingdom's major gas development. The contract makes KEPCO one of the largest foreign contractors working inside Aramco's expanding gas operations as Riyadh pushes development beyond crude oil.2
But pricing pressure runs the other way. On Monday (2026-07-06), Saudi Aramco cut crude prices for Asian buyers by $11 a barrel, the steepest reduction in more than two decades, as surging global supply intensified competition for market share. The kingdom holds roughly 14-15% of global crude exports, according to The Observatory of Economic Complexity, and the discount is aimed at defending those flows.4
That cut sits in direct tension with the Q2 fiscal improvement. The budget recovery came almost entirely from higher per-barrel revenue, not volume — exports only returned toward normal in late June and early July. Sustained discounting to Asian buyers, who absorb the bulk of Saudi crude flows, would compress that revenue line even as shipment volumes approach pre-war levels. Aramco has said it plans to route more than 5 million barrels a day through alternative logistics as Gulf access normalises, but the price at which those barrels clear is moving lower.1,3,4,6
The Q3 oil revenue print will be the first clear test of whether Riyadh can sustain the fiscal rebound while simultaneously discounting to protect its Asian market share.6,4