Bahrain Economy Contracts as Oil Output Plummets Amid Iran Conflict

Bahrain's economy contracted by 3.8% in the first quarter of 2026 due to a sharp drop in oil activity caused by the US-Iran conflict, according to official data.

The decline reversed a 2.7% expansion seen a year earlier and 4.6% growth in the fourth quarter of 2025.

The national economy recorded strong performance in January and February 2026 before being impacted by the Iranian aggression on March 1, which led to a force majeure declaration after a drone strike set fire to the Bapco refinery complex at Sitra.

Oil activities fell by more than 37% in the first quarter due to maritime traffic restrictions in the Strait of Hormuz, reducing export capacity.