In its monthly report, the Saudi Arabian central bank revealed that in July, the kingdom’s foreign reserves fell by over $16 billion, in the biggest drop since the outbreak of the Covid-19 pandemic in 2020.

After rising in May and June, the reserves in net foreign assets fell to 1.53 trillion riyals ($407 billion), hitting the lowest level seen since 2009, as the nation reduced its oil production in an effort to stabilize prices.

In July, August, and September, Riyadh is expected to produce an average of 9 million barrels per day (bpd), after imposing a unilateral voluntary cut in production of 1 million bpd which it performed in an effort to “support the stability of the oil market,” following a period of declining prices.

Although initially the cut in production was supposed to only be imposed for the month of July, it subsequently was extended through August and September.

Monica Malik, the chief economist at Abu Dhabi Commercial Bank said, “The net foreign asset position should improve in September, especially when the first performance-linked dividend distribution” is delivered from the nation’s oil major Saudi Aramco. Earlier in the month, the company had announced that beginning in the third quarter of 2023, it would be delivering performance-based dividends for six quarters.

Saudi Arabia’s bottom line has been hurt by lower crude prices this year compared to 2022, when the kingdom took in almost $326 billion in windfall taxes, as the price of oil surged on supply disruptions caused by a combination of the war in Ukraine and sanctions placed on Russia.

This year reduced oil exports also hit state revenues according to economists, who warn the nation is at risk of experiencing a budget deficit.

Data released earlier this month showed that the world’s largest crude exporter suffered a widening budget deficit as it saw higher expenditures on diversification from oil as export profits declined.