Oil price spikes as Bahrain troops attack protesters

Benchmark crude for one-month delivery was trading above $110 a barrel at 8am in London, up from a three-week low near $107 earlier in the day.

Oil prices have been falling since rising close to $120 in late February - a two-an-a-half-year high - when ongoing instability in Libya stoked supply jitters across the Middle East and North Africa.

This week tensions reignited after Bahrain's Sunni Muslim rulers called for troops from Sunni-ruled Saudi Arabia and other Arab nations to quell an uprising by the island's Shi'ite Muslim majority.

Over 60pc of Bahrainis are Shi'ites who complain of discrimination at the hands of the Sunni royal family.

Calls for the overthrow of the monarchy have alarmed the Sunni minority, which fears that unrest could serve non-Arab Shi'ite power Iran.

On Monday, more than 1,000 Saudi troops entered the kingdom at the request of Bahrain's Sunni rulers. The United Arab Emirates has sent 500 policemen and Qatar said it would also send police.

The Saudi intervention has led to saber-rattling by Iran.

Yesterday the king of Bahrain declared a three-month state of emergency. Today Bahraini security forces in light armoured personnel carriers began to clear makeshift roadblocks from a thoroughfare leading to the main financial district on Wednesday, as pitched battles raged with protesters.

Demonstrators said at least two people were killed after a assault on Pearl Square, which has been the center of uprising against Bahrain's rulers since it began more than a month ago. Clouds of tear gas filled streets and black smoke rose from the square as helicopters flew above it.

The square was cleared by security forces late last month but was later retaken by protesters after a deadly confrontation with army units.

The United States, a close ally of both Bahrain and Saudi Arabia, said it was concerned about reports of growing sectarianism in the country, home to the US Navy's Fifth Fleet.

It dispatched Assistant Secretary of State Jeff Feltman to Bahrain to push for dialogue to resolve the crisis.

Britain has advised its citizens not to travel to Bahrain and urged those in the Gulf state to prepare to leave as soon as they can.

The Bahrain bourse will be closed during the emegency.

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