Saudi authorities blocked roads in a flashpoint Shiite town Saturday, residents said a day after security officials reported that gunmen killed a two-year-old boy and a Pakistani man.
The gunfire targeted a redevelopment site in a neighbourhood of the Shiite town of Awamiya, the interior ministry said late Friday.
Workers on the project in the old Almosara district "came under fire and their vehicles were targeted by explosives" from within the neighbourhood, the ministry said in a statement.
It did not specify when the incident took place but said criminals engaged in the drug and arms trade tried "to jeopardise the project and protect their terrorist activities that they launch from the abandoned houses in the neighbourhood".
As police responded to the shooting, suspects "opened random and heavy gunfire at passersby and security men", killing a two-year-old Saudi boy and a Pakistani resident.
There was also firing by police, residents said.
The ministry said 14 people were wounded in the shooting, including two Pakistanis, an Indian, a Sudanese and four policemen.
A resident, however, gave a higher toll, saying that a Saudi security guard hit by a random bullet while visiting the town later died of his injuries.
Residents had first reported gunfire on Wednesday in Awamiya, a town on the Gulf coast. They said the shooting broke out as authorities moved on the Almosara district.
Early Saturday more gunfire sounded in the area, where authorities blocked roads, a resident said.
"The situation's miserable," another resident said, asking for anonymity.
"We think it will take a long time to finish this operation."
Residents told AFP that people from the Almosara area have been asked to leave, and some have sought shelter with people in adjacent districts.
Photos circulating on social media Saturday showed special police wearing balaclavas and camouflage pants moving civilians in their armoured cars.
In March the ministry said a teenage suspect died from wounds after Saudi police "responded" under fire while looking for suspects hiding among abandoned homes in Almosara.
A local resident at that time told AFP that people had been living for more than a month in Almosara resisting the urban renewal project.
They had no water and their electricity came only from generators, the resident said, adding that they wanted to be given new houses and the area kept as a historical district.
Awamiya, a town of 30,000 in the Shiite-majority Qatif district, was the home of Nimr al-Nimr, a Shiite cleric put to death in January last year for "terrorism."
Nimr was a driving force behind protests by Shiites that began in 2011 and developed into a call for equality in the Sunni-majority kingdom.