London — Saudi Arabia's economy contracted 7% year on year in the second quarter as the world's largest crude exporter was hit hard by the demand destruction caused by the coronavirus pandemic, the kingdom's General Authority for Statistics reported Sept. 30.

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The historic drop illustrates the urgency behind Saudi Arabia's efforts to lift and stabilize crude prices through OPEC's alliance with Russia and other key producers, after global oil demand cratered due to the pandemic.

It also highlights the kingdom's difficulties in diversifying its economy away from its lifeblood oil industry that contributes more than two thirds of its revenues.

The Q2 decline "originated mainly from the contraction in the non-oil sector by 8.2% and the oil sector by 5.3%," the authority said. "The private sector and the government sector recorded a negative growth rate of 10.1% and 3.5%, respectively."

Saudi Arabia's petroleum refining activities recorded a 14% year-on-year drop in the quarter, the data showed.

The Saudi finance ministry earlier reported that oil revenue in the first half of 2020 was 35% lower than a year earlier, while non-oil revenue fell 37%.

The General Authority for Statistics said the kingdom recorded a current account deficit of Riyals 67.4 billion ($18 billion), or 12% of GDP, in Q2 compared with a surplus of Riyals 42.9 billion, or 5.8% of GDP, a year earlier.

The OPEC+ alliance is in the middle of a 7.7 million b/d production cut accord aimed at speeding the global oil market's rebound from the coronavirus crash. The cuts are scheduled to ease to 5.8 million b/d in 2021, but Saudi energy minister Prince Abdulaziz bin Salman and other OPEC ministers say they have not ruled out extending the current cuts or even deepening them, if needed.