|Country profile: Bahrain|
But Bahrain never reached the levels of production enjoyed by Kuwait or Saudi Arabia and has been forced to diversify its economy.
The country has been headed since 1783 by the al-Khalifah family, members of the Bani Utbah tribe, who expelled the Persians. From 1861, when a treaty was signed with Britain, until independence in 1971, Bahrain was virtually a British protectorate.
The king is the supreme authority and members of the Sunni Muslim ruling family hold the main political and military posts. There are long-running tensions between Bahrain's Sunnis and the Shia Muslim majority. On occasion, these have spilled over into civil unrest.
In 2001 Bahrainis strongly backed proposals put by the emir - now the king - to turn the country into a constitutional monarchy with an elected parliament and an independent judiciary.
Elections were duly held in 2002 for a 40-member parliament, the Council of Deputies. It was the first such poll in nearly 30 years. The new body included a dozen Shia MPs.
The country has enjoyed increasing freedom of expression, and monitors say the human rights situation has improved. However, opposition groups and campaigners continue to press for political reforms, including greater powers for the elected assembly.
Bahrain - a chain of around 30 islands - is a haven for tourists from the region, who take advantage of its relaxed social environment. A close ally of the US, it is home to the American navy's Fifth Fleet.
King: Sheikh Hamad bin Isa al-Khalifah
Sheikh Hamad's title changed to king when Bahrain switched from being an emirate to a monarchy in February 2002.
Born in 1950, he was educated at a public school in Cambridge, England, and went on to study at Mons Officer Cadet School in Aldershot, England, and at the US Army Command and Staff College, Fort Leavenworth, Kansas.
In 1968, he founded and became commander-in-chief of the Bahrain Defence Force (BDF). He served as minister of defence from 1971 to 1988.
Bahrain is keen to promote itself as a regional media hub; the London-based pan-Arab satellite broadcaster MBC chose it as the base for its MBC-2 channel.
Most radio and TV stations are state-run. The country's first private radio station - Sawt al-Ghad - launched in 2005, but the authorities shut it down in 2006, alleging irregularities.
A press law guarantees the right of journalists to operate independently and to publish information. But they are liable to jail terms for offences which include insulting the king, and self-censorship is practised.