* Saudi king expected back after long sick leave abroad
* Analysts says king could announce reforms
RIYADH, Feb 18 (Reuters) - Saudi Arabia’s King Abdullah bin Abdul-Aziz will return home within days after undergoing medical treatment abroad for three months, a government official said on Friday as unrest hit Gulf Arab neighbour Bahrain.
Abdullah, who is around 87, left the top OPEC oil exporter on Nov. 22 to undergo surgery in New York after a blood clot complicated a slipped disc. He has been recuperating in Morocco for the past four weeks.
“We know he is coming some time next week,” said a spokesman for the foreign ministry. In the capital Riyadh, workers were putting up flags and posters welcoming the king back home.
Analysts say Abdullah might announce some reforms to address dissent in the Gulf Arab state. Diplomats do not expect unrest like that in Egypt or Tunisia but the kingdom faces challenges such as high youth unemployment and a massive housing shortage.
The U.S. ally fears that unrest in Bahrain, where majority Shi’ites have been protesting against the Sunni-led government, might spread to its own Shi’ite community, a minority concentrated in the eastern oil-producing area.
Political stability in Saudi Arabia is of global concern because the kingdom controls more than a fifth of the world’s oil reserves, and is a vital U.S. ally as well as a major holder of dollar assets and home to the biggest Arab bourse.
The king’s medical troubles have aroused concern over whether a reformist like himself or a conservative will succeed him.
A frail Crown Prince Sultan, who has health problems of his own, returned from long holiday in Morocco to govern the kingdom in Abdullah’s absence.
With both Abdullah and Sultan in their 80s, speculation has arisen that Interior Minister Prince Nayef, a conservative who is around 77, could take over in the future.
Diplomats say Nayef appears lukewarm on social and economic reforms promoted by Abdullah since taking office in 2005. (Reporting by Asma Alsharif and Ulf Laessing; editing by Andrew Roche)