The West often boils down the difficult relations between Iran and Saudi Arabia to sectarian conflicts between Wahhabists and militant Shiites, but the rivalry is much more complex.

Beginning. 1920
This oversimplified view of the conflict needs to be adjusted, especially when looking back at the longstanding relations between the modern states of Saudi Arabia and Iran. As they took shape in the 1920s, their rulers - Ibn Saud and Shah Reza Pahlavi - focused on modernizing their countries. In 1929, the two countries concluded a friendship agreement. The relationship became even closer about a decade later when Mohammed Reza Pahlavi came to power as Shah in 1941. With the help of Washington, Iran and Saudi Arabia pursued the goal of containing socialist Pan-Arabism and the communist influence of the Soviet Union in the region. 

American influence. 1933
Bilateral relations between the Kingdom of Saudi Arabia and the United States began in 1933 when full diplomatic relations were established. Despite the differences between the two countries—an ultraconservative Islamic absolute monarchy, and a secular, democratic republic—the two countries have been allies. In recent years, the two countries have occasionally been described as having a "Special Relationship" with one another. Former Presidents George W. Bush and Barack Obama have close and strong relations with senior members of the Saudi Royal Family.
Since World War II, the two countries have been allied in opposition to Communism, in support of stable oil prices, stability in the oil fields and oil shipping of the Persian Gulf, and stability in the economies of Western countries where Saudis have invested. In particular the two countries were allies against the Soviets in Afghanistan and in the expulsion of Iraq from Kuwait in 1991.

Alienation USA-Saudi Arabia. 1950
In the late 1950s, King Saud, the eldest son of King Abdulaziz, came to power after his father's death. During Saud's time the U.S.–Saudi relations had faced many obstacles concerning the anti-communism strategy. President Dwight D. Eisenhower's new anti-Soviet alliance combined most of "the kingdom's regional rivals and foes", which heightened Saudi suspicions. For this reason, in October 1955, Saud had joined the pro-Soviet strategy with Egyptian president Gamal Abdel Nasser. Furthermore, Saud dismissed the U.S. forces and replaced them by Egyptian forces. Thus, this act had sparked and innovated a new and a large conflict in the relationship.

Re-approachment USA-Saudi Arabia. 1956
But in 1956, during the Suez crisis, Saud began to cooperate with the U.S. again after Eisenhower's opposition of the Israeli, British, and French plan to seize the canal. Eisenhower opposed the plan because of anti-Soviet purposes, but King Saud had admired the act and decided to start cooperating with the U.S. As a result, Egyptian power greatly declined while US-Saudi relations were simultaneously improving.

Oil-crisis 1973
As the United Kingdom withdrew from the Gulf region in the late 1960s and early 1970s, the U.S. was reluctant to take on new security commitments. Instead, the Nixon administration sought to rely on local allies to "police" American interests (see Nixon Doctrine). In the Gulf region, this meant relying on Saudi Arabia and Iran as "twin pillars" of regional security. Whereas in 1970 the U.S. provided less than $16 million to Saudi Arabia in military aid, that number increased to $312 million by 1972. As part of the "twin pillars" strategy, the U.S. also attempted to improve relations between the Saudis and the Iranians, such as by persuading Iran to remove its territorial claim to Bahrain.
Then came the low point of the relationship before 9/11, as Faisal, king of Saudi Arabia, decided to contribute in an oil embargo against the US and Europe in favor of the Arab position during the Yom Kippur War. That caused an energy crisis in the US. "America's complete Israel support against the Arabs makes it extremely difficult for us to continue to supply the United States with oil, or even remain friends with the United States," said Faisal in an interview with international media.
The OPEC oil embargo was a decision to stop exporting oil to the United States. The twelve members of the Organization of Petroleum Exporting Countries agreed to the embargo on October 19, 1973. Over the next six months, oil prices quadrupled. President Nixon prompted the embargo when he decided to take the United States off of the gold standard in 1971. That meant that countries could no longer redeem the U.S. dollars in their foreign exchange reserves for gold, as established by the Bretton Woods Agreement in 1944. While it sent the price of gold skyrocketing, it also sent the value of the dollar down.
For OPEC, the last straw came when the U.S. supported Israel against Egypt in the Yom Kippur War. On October 19, 1973, Nixon requested $2.2 billion from Congress in emergency military aid for Israel. The Arab members of OPEC responded swiftly, halting oil exports to the United States and other Israeli allies.

Oil-company ARAMCO 1944 – to present
Saudi Aramco's origins trace to the oil shortages of World War I and the exclusion of American companies from Mesopotamia by Great Britain and France under the San Remo Petroleum Agreement of 1920. The US Republican administration had popular support for an "Open Door policy", which Herbert Hoover, secretary of commerce, initiated in 1921. Standard Oil of California (SoCal) was among those US companies seeking new sources of oil from abroad.

Through its subsidiary company, the Bahrain Petroleum Co. (BAPCO), SoCal struck oil in Bahrain in May 1932. This event heightened interest in the oil prospects of the Arabian mainland. On 29 May 1933, the Saudi Arabian government granted a concession to SoCal in preference to a rival bid from the Iraq Petroleum Co. The concession allowed SoCal to explore for oil in Saudi Arabia. SoCal assigned this concession to a wholly owned subsidiary, California-Arabian Standard Oil (CASOC). In 1944, the company name was changed from California-Arabian Standard Oil Co. to Arabian American Oil Co. (or Aramco). In 1948, Standard Oil of New Jersey (later known as Exxon) purchased 30% and Socony Vacuum (later Mobil) purchased 10% of the company.
In 1950, King Abdulaziz threatened to nationalize his country's oil facilities, thus pressuring Aramco to agree to share profits 50/50. A similar process had taken place with American oil companies in Venezuela a few years earlier. The American government granted US Aramco member companies a tax break known as the golden gimmick equivalent to the profits given to King Abdulaziz. In the wake of the new arrangement, the company's headquarters were moved from New York to Dhahran. In 1951, the company discovered the Safaniya Oil Field, the world's largest offshore field. In 1957, the discovery of smaller connected oil fields confirmed the Ghawar Field as the world's largest onshore field.

In 1973, following US support for Israel during the Yom Kippur War, the Saudi Arabian government acquired a 25% stake in Aramco. It increased its shareholding to 60% by 1974, and finally took full control of Aramco by 1980, by acquiring a 100% stake in the company. Aramco partners continued to operate and manage Saudi Arabia's oil fields. In November 1988, a royal decree changed its name from Arabian American Oil Co. to Saudi Arabian Oil Co. (or Saudi Aramco) and took the management and operations control of Saudi Arabia's oil and gas fields from Aramco and its partners. In 2005, Saudi Aramco was the world's largest company with an estimated market value of $781 billion.

Money talks. USA and Saudi Arabia come together again. 1974
Despite the tensions caused by the oil embargo, the U.S. wished to resume relations with the Saudis. Indeed, the great oil wealth accumulated as a result of price increases allowed the Saudis to purchase large sums of American military technology. The embargo was lifted in March 1974 after the U.S. pressured Israel into negotiating with Syria over the Golan Heights. Three months later, Washington and Riyadh signed a wide-ranging agreement on expanded economic and military cooperation.

The Saudis' increase of oil production to stabilize the oil price and the support of anti-communism have all contributed to closer relations with the U.S. In January 1979, the U.S. sent F-15 fighters to Saudi Arabia for further protection from communism. Furthermore, the U.S. and Saudi Arabia were both supporting anti-communist groups in Afghanistan and struggling countries, one of those groups later became known as the Al-Qaida terrorist organization.

Revolution in Iran 1979. Khomeini.
In 1979, the Iranian Shah was overthrown and the Islamic Republic, which was immediately recognized by the Saudis, was founded. Riyadh's hopes of maintaining good relations with Tehran did not pan out. There was no place for the conservative Saudi monarchy in Ayatollah Khomeini's vision of a global Islamic revolution. He even saw the Saudis as an impediment to the revolution. Khomeini tried to influence members of the Shiite minority in Saudi Arabia. However, he did not touch on the centuries-old dispute between Sunnis and Shiites. Instead, he used the slogan "Liberation of the oppressed." This way, Tehran thought it would win over Islamists in the Sunni world as well. Despite the Sunni-Shiite conflict, it was a moment of unity. It went well, even when Khomeini demanded a greater say in the management of the Hajj, the pilgrimage to Mecca, where Iranian pilgrims at that time often caused trouble by holding demonstrations at the religious event. This motivated Fahd of Saudi Arabia to adopt the forgotten title of "Custodian of the Two Holy Mosques" in 1986. The following year, when Saudi police opened fire on Iranian pilgrims demonstrating in Mecca, it became clear that Riyadh would no longer tolerate interference from Tehran. In response, Iran severed all diplomatic ties.

Bad relations between Iran and Saudi Arabia. 1980 to present
Relations had already hit rock bottom since Saudi Arabia supported Iraq in the Iran-Iraq War that had been raging since 1980. The Saudis supported Iraqi dictator Saddam Hussein more as a gesture of Arab solidarity than out of any particular conviction. At the beginning of the 1990s, however, the political climate changed in the region. Saddam proved to be more and more unpredictable, especially after his invasion of Kuwait in 1990, and was no longer feared only by Iran, but also by the Saudi royal family.

The two countries reached a security agreement in 2001, but Tehran's contribution to the ongoing weapons buildup by the pro-Iranian Lebanese Shiite militia Hezbollah worried Riyadh, which began to support the rival Sunni-Christian camp in response. The Saudis were also concerned about Iran's nuclear program. Even at this point in time, both countries - once allies of the US in the fight against communism - were not divided over an ancient religious dispute.
Iran's hatred of Washington's doctrine was fed by American intervention in Iraq in 2003. Iran perceived the American advance as an intervention in its immediate sphere of influence. When US troops withdrew from Iraq, Iran started interfering with Iraq's interests. Saudi Arabia reacted by trying to curry favor with an Iranian ally, Syrian President Bashar al-Assad.

Civil War in Syria. 2010 to present
The rapid Saudi-Syrian approchement of 2010, however, ended quickly when the Arab Spring and the Syrian Civil War began. The Syrian war, in which Saudi Arabia and Iran support different camps, is being interpreted as a sectarian war; however, this is not true. Sunnis are also fighting each other in Syria today and for the radical Islamist terrorists from the self-styled "Islamic State" (IS), both Shiites and rival Sunni jihadists are mortal enemies.
Iran and Saudi Arabia view these extremists as the greatest threat in the region. Both regimes, especially as they are facing increasing pressure to adapt to secularization, do their best to avoid using religious rhetoric in their verbal exchanges. Terrorism, the support of terrorism and the desire for expansion are the most common official accusations. By no means do these fit the religious prism the West uses to view the Iranian-Saudi Arabian rivalry.

Sunni and Shia
Sunni and Shia Muslims share the most fundamental Islamic beliefs and articles of faith. They  are the two main sub-groups within Islam. They do differ, however, and the separation between them stemmed initially not from spiritual distinctions, but from a question of leadership
The division between Shia and Sunni dates back to the death of the Prophet Muhammad in 632. This event raised the question of who was to take over the leadership of the Muslim nation.
Sunni: The word "Sunni" in Arabic comes from a word meaning "one who follows the traditions of the Prophet." It is considered to the be the orthodox branch of Islam. Sunni Muslims agree with the position taken by many of the Prophet's companions at the time of his death. This is that the new leader should be elected from among those capable of the job. It is what was done when the Prophet Muhammad's close friend and adviser, Abu Bakr, became the first Caliph (successor or deputy of the Prophet) of the Islamic nation.

Shia: On the other hand, some Muslims believe that leadership should have stayed within the Prophet's own family, among those specifically appointed by him, or among Imams appointed by God Himself. Shia Muslims believe that following the Prophet Muhammad's death, leadership should have passed directly to his cousin and son-in-law, Ali bin Abu Talib. Throughout history, Shia Muslims have not recognized the authority of elected Muslim leaders, choosing instead to follow a line of Imams which they believe have been appointed by the Prophet Muhammad or God Himself.The word "Shia" in Arabic means a group or supportive party of people. The commonly-known term is shortened from the historical "Shia-t-Ali," or "the Party of Ali." This group is also known as Shiites or followers of "Ahl-al-Bayt" or "People of the Household" (of the Prophet).
From this initial question of political leadership, some aspects of spiritual life have been affected and now differ between the two groups of Muslims. This includes rituals of prayer and marriage. In this sense, many people compare the two groups with Catholics and Protestants. Fundamentally, they share some common beliefs, they simply practice in a different manner. It is important to remember that despite these differences in opinion and practice, Shia and Sunni Muslims share the main articles of Islamic belief and are considered by most to be brethren in faith. In fact, most Muslims do not distinguish themselves by claiming membership in any particular group, but prefer to call themselves simply "Muslims."

Monarchy or Republic
Saudi Arabia is governed by the King and his family. 3000 princes are governing principalities along the country. Iran is a republic. The inherited aristocratic power versus the chosen republic power is here inverted, the both countries are on the politic matters arguing different their religious statements. So, in fact, the crisis between Saudia Arabia and Iran, fueled by ideological arguments is in reality triggered by classic power competition. The former president of Egypt Nasser had also republican wishes for his country, which were opposed by Saudi Arabia. Later he got murdered.