Iran-Saudi Arabia tensions will increase instability

Significance

This followed a marked intensification of hostile verbal exchanges between Iranian and Saudi officials and religious leaders in the weeks leading up to the annual pilgrimage to sacred Islamic sites in Saudi Arabia in mid-September. The two countries' mutual hostility prevented Iranian citizens from taking part in the hajj. Iran's developing ties with both Russia and Turkey are also raising mutual tension with Saudi Arabia.

Impacts

• Tension between Iran and Saudi Arabia will hinder future efforts by oil producers to agree a strategy leading to a rise in global prices.
• Mutual hostility between Tehran and Riyadh will be a major factor behind the failure of international efforts to end the war in Yemen.
• Medium-term low oil prices may threaten Saudi Arabia's ability to provide further financial bail-outs to Egypt, a key Sunni Arab state.