Bahrain is a small island monarchy in the Persian Gulf with a population of 1.6m. It signed the Abraham accords with Israel in 2020, weeks after the UAE. The country is ruled by a Sunni ruling class over a largely Shia population. America's Fifth Fleet is headquartered there.
Bahrain's oil and aluminium industries account for more than two-thirds of government revenue and around a quarter of GDP. BAPCO, the national oil company, operates a refinery at Sitra. Aluminium Bahrain (ALBA) operates the biggest aluminium smelter outside China. Gas reserves are dwindling.
Bahrain once hosted a thriving banking industry, but as Dubai became a bigger hub and bankers sought favour with rich rulers in Saudi Arabia and the UAE, financial firms relocated. Public debt stands at 146% of GDP, with almost a third of government revenue going on interest payments. The country was on course to run a budget deficit of more than 10% of GDP in 2026 before the Iran war began. Saudi Arabia, the UAE and Kuwait bailed Bahrain out in 2018.
Bahrain's only land connection to the outside world is a 25km causeway to Saudi Arabia. More than 80% of tourists—mostly Saudis visiting the closest spot where alcohol is legal—arrive this way.
During America's war on Iran, Iran rained retaliatory drones and missiles on Bahrain, hitting refineries, factories, apartments and the Fifth Fleet headquarters. BAPCO halted some shipments from its Sitra refinery. ALBA suspended exports, though the smelter continued running—restarting an aluminium smelter once cold can take six months. The main constraint was the closure of the Strait of Hormuz, which left no way to export oil or aluminium. Goldman Sachs estimated that a two-month conflict could cause GDP to contract by double digits in Bahrain.
As of March 10th 2026 Bahrain had been struck by more than 350 incoming munitions, intercepting most of them. On March 9th a drone attack hit Bahrain's sole oil refinery, injuring 32 people and leading the state-run oil company to declare force majeure.
In January 2011 Bahrainis took to the streets to protest against the monarchy, building an encampment at Pearl Roundabout, a traffic circle in the capital dominated by a sculpture of a pearl—a nod to the country's formerly pearl-based economy. One month later the government bulldozed the monument, stopped referring to the circle by its popular name and insisted on the official title: Gulf Co-operation Council Roundabout. A few years later the roundabout was abolished altogether. That stretch of highway is now a junction named after Omar ibn al-Khattab, a seventh-century caliph revered by Sunnis but reviled by Shias. The sectarian overtones were probably no coincidence: many of the 2011 protesters were Shias.
"I'd love to go out with you, but the last time I went out, I never came back."