All eyes on Bahrain as Gulf tremors frighten oil markets

Tuesday, February 22, 2011
By Paul Martin

Oil analysts are paying very close attention to fast-moving events in Bahrain, fearing that clashes between the island’s Sunni elite and an aggrieved Shi’ite majority could embroil the two Gulf giants of Iran and Saudi Arabia.

By Ambrose Evans-Pritchard
22 Feb 2011

“While events in Libya are undoubtedly of prime importance, they are a red herring for the oil market,” said Helima Croft from Barclays Capital. “We believe the unrest in Bahrain may be of far greater importance to the strategic balance in the Middle East and to the oil market.”

The risk group Exclusive Analysis said there is a “moderate risk of an extremely violent transition” in Bahrain, the linchpin of stability in the Gulf and host to the US 5th Fleet. “There is a significant probability that the present order is completely overthrown and replaced by a new order aligned with Iran,” it said.

Marchers from Bahrain’s Shi’ite community, 70pc of the Island’s 800,000 population, poured into Manama’s Lulu square on Tuesday in another day of civic protest after the royal family promised to call off the bloody crackdown.

King Hamad is under intense pressure from the US to refrain from further bloodshed, but this softly-softly policy contains its own risks. While the centrist Shia party al-Wefaq wants peaceful reform, the more radical Haq movement is less easy to control.

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