Saudi Arabia severed diplomatic relations with Iran this week, warning that disruption of trade ties are set to follow. The catalyst for deteriorating conditions this time was the execution of Shiite cleric Nimr al-Nimr in Saudi Arabia, who was charged with terrorism-related crimes including sedition.

However, the conflict between Iran and Saudi Arabia is long-standing, with political, religious and economic roots.

Iran and Saudi Arabia are not natural enemies but they are natural rivals. Both neighbours are dependent on oil rents for the majority of national revenue. Recently, Saudi Arabia's Walmart strategy to undermine private players by driving market prices below cost has crippled Iran's revenues. The resulting global glut of oil is so large that even risk speculation and recent tensions weren't enough to raise prices.

Both states are also self-professed guardians of the Islamic faith. Nevertheless, though much has been made of their central roles in the global Sunni and Shi'a communities, the primary concern for both states is power, not religion. In the Gulf, power is a zero-sum game. With the nuclear deal set for implementation this month, Saudi Arabia sees the lifting of financial sanctions as bolstering Tehran's tools for regional influence. As if to prove Saudi Arabia's falling favour amid the tentative restoration of ties between the US and Iran, the Obama Administration has thus far maintained a neutral stance in the political row over al-Nimr.

Finally, both states face serious internal division and discord. In Iran, some hardliners who viewed the nuclear deal as capitulation to the West attempted to block it, forcing President Rouhani to play a delicate domestic balancing act. In Saudi Arabia, domestic troubles have been growing since the Arab Spring. In response, some concessions have been enacted, including the enfranchisement for women in municipal elections. But the Saudis have also led a potentially economically ruinous OPEC strategy that has forced the Kingdom into crippling deficit.

In escalating the war of words with Iran, some analysts argue that the Saudi leadership is stoking nationalist tendencies to deflect attention from these domestic concerns. Strident foreign policy under King Salman has seen the near daily bombardment of Yemen, a course which appears set to continue. Saudi Arabia announced it was formally ending the fragile ceasefire in Yemen on the same day that al-Nimr was executed.

Meanwhile, protests are heating up on the ground. This is the second time in six months that protesters have descended on the Saudi Embassy in Tehran. The first, in August last year, condemned the treatment by Saudi police of two Iranian hajj pilgrims (the Saudis would find themselves at the centre of another hajj scandal when a stampede in September killed more than 2000 people). Over the last few days, demonstrators have turned to looting the Saudi Embassy and setting it alight.

These demonstrations, and the lack of Iranian protection of what is technically Saudi sovereign territory, were the stated cause for severing diplomatic ties and continue to have flow-on effects in the region. Bahrain has followed its patron in condemning Iran, and the UAE has downgraded diplomatic relations.

Though the other powerful members of the Gulf Cooperation Council have been largely silent, it will likely fall upon one of its members, Oman, to negotiate a resolution between the powers. Muscat has a distinguished history of regional diplomacy and is one of the few states to maintain productive relationships with both Tehran and Riyadh. However, diplomacy will take time.

In the interim, there will likely be little progress on crucial fronts. Along with slim odds for a speedy resolution in Yemen, hopes are waning for cooperation on tackling ISIS. At this rate, 2016 is set to be a long year.

Photo by Getty/Fatemeh Bahram.