A new, massive oil discovery in Bahrain could help the island kingdom dramatically improve its economic and fiscal strength, according to analysts at Moody's credit ratings agency.

In early April, Bahrain's Oil Minister Sheikh Mohammed bin Khalifa Al Khalifa announced its biggest discovery of hydrocarbon deposits in decades, estimated to be at least 80 billion barrels of tight oil and between 10 and 20 trillion cubic feet of deep natural gas.

Found off Bahrain's west coast, if it is verified by an international oil consortium as being technically and economically recoverable it could be a boon for the nation's economy.

Bahrain's budget deficit was as high as 17.8 percent of gross domestic product (GDP) in 2016 and the International Monetary Fund (IMF) predicted there would be a deficit of 11.9 percent of GDP in 2018. But, while improving, Bahrain's debt factor continues to be a concern for both ratings agencies and the IMF.

As such, a new oil discovery could be just the thing Bahrain needs to boost its recovery.

"The find… could stimulate private investment in the country's energy sector in the near-term, and in the medium-term could increase government oil and gas related revenue, and reduce the country's fiscal and current account deficit," Moody's analysts Alexander Perjessy, Matt Robinson and Marie Diron said in a note Wednesday.

Like other Gulf nations, Bahrain is keen to diversify its economy away from oil, but revenues from oil exports still make up the bulk of government income. Hydrocarbon-related revenue accounted for 75 percent of government revenue in 2017, down from 87 percent in 2013.

Although Bahrain is one of the smallest oil exporters in the region, it is the Gulf Cooperation Council's (GCC) oldest oil producer, while remaining its littlest, having started production in the 1930s.

Bahrain's hydrocarbon endowment is relatively small, Moody's noted, with an output of around 198,000 barrels per day (bpd) of which around 150,000 bpd comes from an offshore field that it shares with Saudi Arabia. By contrast, Saudi Arabia produces 12.3 million bpd.

Bahrain's onshore oil reserves are estimated to be around 125 million barrels which, at the current rate of production, would last less than seven years, the analysts noted, making the new discovery of as much as 80 billion barrels very important.

"A significant oil and gas discovery could improve Bahrain's economic and fiscal strength by allowing the kingdom to boost its rate of hydrocarbon production (and hence gross domestic product) and/or to extend its current rate of production for a number of additional years," Moody's said.