The 50 per cent slump in oil revenues between June 2014 and February 2015 is likely to have significant ramifications for stability in Bahrain.

In 2014, the country derived about 84 per cent of total revenues from the oil and gas industry, and its fiscal breakeven oil price stood at an estimated $125 a barrel, the highest of any GCC nation.

Increasing its vulnerability to oil price fluctuations is the fact that Bahrain has the smallest financial buffers and the biggest public debt of any country in the region.

All this puts the government in a difficult position to manage the active protest movement in the country, which sprung into being with mass demonstrations in 2011 and is due to see its fourth anniversary on 14 February.

As the continuing daily protests move into their fifth year, Bahrain’s Shia suburbs reflect the entrenched nature of the conflict. Pro-democracy graffiti and painted images of protesters who have been killed in demonstrations adorn walls, and streets are blocked with barricades.

In an effort to stamp out the protest movement over recent months, Manama has taken a harder line with activists, arresting Sheikh Ali Salman, the leader of the Al-Wefaq opposition party and shutting down a television station that aired an interview with the party’s deputy leader.

The crackdown has increased anger among those calling for reform and demonstrators have continued to take to the streets.

Bahrain’s restive Shia population will make it politically difficult to push through cuts to public spending that analysts say are needed to try and ease the country’s escalating debt problems.

At the same time, falling government income will make it almost impossible to win over those who are demanding political reform with handouts and increased benefits.

Support from the GCC, led by Saudi Arabia, has helped to shore up the ruling family’s position.

A total of 1,500 soldiers were sent from Saudi Arabia and the UAE to help subdue protests in Bahrain in 2011, and in March that year, GCC nations agreed to hand out $10bn in aid over 10 years.

The aid is now being distributed and has spurred on several infrastructure projects that should help create jobs and lower the cost of housing. But in the face of lower oil prices, the new initiatives are unlikely to be enough to stop protesters calling for political reform.

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