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"Two wanted terrorists were killed after exchanging fire with security forces," Al-Ekhbariya reported.
The two suspects had fortified themselves in the home of a Dammam resident, the state TV channel said.
Security forces killed the two unidentified suspects following a shootout in the coastal city, home to some of the Sunni-majority kingdom's Shia minority.
While calm was restored to the residential neighbourhood of Al-Anoud following the attack, with no reports of civilian casualties, details surrounding the identity of the deceased or the security operation itself have not yet been released.
Al-Anoud in Dammam was the site of a suicide attack which killed four people in 2015, when a suicide bomber detonated the explosive belt he was wearing at the entrance of a Shia mosque, during Friday prayers.
The oil-rich eastern region of Saudi Arabia has been hotbed for instability since 2011, following a protest movement inspired by the Arab Spring which called for an end to discrimination against the kingdom's Shia minority.
Nimr al-Nimr, a prominent Shia cleric and stern critic of the regime, was executed on terrorism charges in 2016.
The execution led to diplomatic crisis with the kingdom's arch-rival, Shia-majority Iran.
Shia Muslims in Saudi Arabia constitute between 10-15 percent of the 32 million population. Riyadh denies government discrimination against the minority sect.
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