Saudi Aramco profits hit by falling oil prices

Saudi Aramco's second-quarter profits fell by almost 40% as a result of weaker oil prices. Yahoo Finance Markets Reporter Jared Blikre notes that the company remains highly profitable despite the loss, noting that the company had a net income of $30 billion last quarter, which Blikre describes as a "stabilization level."

Wheat prices rose after a Ukrainian drone attacked a Russian ship in the Black Sea. Tensions in the area have risen after Russia backed out of a grain deal with Ukraine. Blikre checks wheat prices and explains why there isn't "too much concern on the geopolitical front."

Video transcript

- Saudi Arabia's oil giant, Aramco, took an almost 40% profit hit in Q2. That's amid weaker oil prices. Here with a check of commodities, we've got Yahoo Finance's own Jared Blikre. Hey, Jared.

JARED BLIKRE: Hi there. Don't cry for the Saudis, they're making bank buck here. And let's take a look at the profits, we're seeing only $30 billion. This is one quarter. In fact, $30 billion is a stabilization level from some time ago. And we can see, we actually peaked around $45 billion, and that was only in one quarter five quarters ago. So the bottom line is this is a company that is making a lot of money for the Saudi government and for its constituents.

You take a look at the price chart here of Saudi Aramco really took off recently this year, also coincides with a perk up in WTI crude futures, also with the Goldman Sachs commodity index. So all in all, we're seeing record profits flow. And these are basically welfare payments to the Saudi citizens as well, so it is a cash cow that will be protected, guys.

- And then you're also watching when talking about commodities, you're looking at wheat too, I believe.

JARED BLIKRE: Yes, there was a Ukrainian drone that interrupted the path, I should say attacked a Russian ship in the Baltic Sea, in the Black Sea rather. And this is a key area for the Russians, and this is what they use to ship their grain all over the world. They are in the midst of a bumper harvest right now, so wheat prices might be particularly sensitive. But this is only a 1.6% gain here, and you're taking a look at a one-year chart. You can see wheat still in the lower end of its price range here.

So what I'm seeing here, not too much concern on the geopolitical front. I can show you what happened a few years ago. We can see what happened with the original invasion of Russia in the Ukraine, and we can see wheat prices really jumped up there. But all very important to monitor because Ukraine is a breadbasket of Europe and Russia is its own breadbasket, and those grains are very useful and are very important to global trade. So we'll have to keep an eye on this. But definitely, an interruption in their shipping options up there is a big deal.