Saudi Arabia’s quarterly fiscal deficit contracted by nearly 75%, largely due to a surge in global oil prices. This improvement occurred even as the ongoing conflict in the region, involving Iran, led to a contraction in the Saudi economy.

The kingdom’s deficit narrowed from $12.2 billion in the first quarter to $3.1 billion in the second quarter. This was primarily driven by a significant increase in oil revenues, which rose by 35% year-on-year. Non-oil revenues also saw a modest increase of 10%.

Despite the positive fiscal development, the overall economic performance was impacted by external factors. The conflict in the region contributed to a decline in the kingdom's GDP by 1.3% in the second quarter compared to the previous year. This highlights the complex interplay between commodity prices, regional stability, and economic growth for Saudi Arabia.