Armchair analysts have been predicting an oil price war between Saudi Arabia and Iran for a while now, and escalating tensions between the countries would seem to portend a major market disruption. But that war may never come.
Saudi Arabia announced Monday that it will sever all commercial ties with Iran, a day after the kingdom said it would cut diplomatic relations with Iran. Protesters stormed the Saudi embassy in Tehran earlier Sunday, and the country's supreme leader, Ayatollah Ali Khamenei, predicted "divine vengeance" for the Saudi execution of a major Shiite cleric.
Saudi Arabia is predominantly Sunni and home to many of Islam's most important holy sites, while Iran is the center of Shiite power for the Islamic world. The two countries are opposite poles in the Middle East's religious politics. Both also possess massive oil reserves.