Later on Wednesday, the Associated Press reported that the Arabian nation of Qatar had recalled its ambassador from Iran, effectively downgrading diplomatic relations with the Shiite theocracy in much the same way that the neighboring United Arab Emirates had done earlier. Al Jazeera added that Djibouti had also cut ties with Iran, while Jordan and Turkey had each made public expressions of support for the Saudis in the midst of the emerging conflict.

Turkish President Recep Erdogan dismissed the Iranian protestors’ justification for the violence, saying that the Saudi execution of Sheikh Nimr al-Nimr was a domestic issue in which Iran had no rightful say. He also criticized Iranian outrage over the execution, suggesting that it was hypocritical in light of Iran’s willful contribution to so many other deaths through its support for the Syrian government of Bashar al-Assad throughout the five year civil war.

Erdogan’s remarks are conspicuously similar to those levied by Iranian officials themselves, in situations where they have sought to diffuse criticism of their own allegedly political imprisonments and executions. For instance, Tehran has repeatedly dismissed American and other Western activism aimed at securing the release of American citizens held prisoner in the country, including Washington Post journalist Jason Rezaian and Christian Pastor Saeed Abedini. Iran, which does not recognize dual citizenship, persistently describes these individuals as Iranian citizens and argues that they should be subject to Iran’s domestic laws, without foreign intervention.

The essential difference between these cases and that of Nimr is only that the relevant identity motivating the protests is not national, but religious. As such, many commentators were quick to point out that the violent protests and subsequent deterioration in diplomatic relations are likely to inflame the already prevalent sectarian tensions throughout the Middle East.

But whereas the Iranian mobs apparently sought to protest the supposedly politically motivated killing of a single influential Shiite, there is reason to believe that the response from Gulf Arab states has much more to do with genuine concerns over national security and an ascendant Islamic Republic of Iran. This helps to explain the widespread coordination over the issue, which, according to First Post, will see the Gulf Cooperation Council gathering in Riyadh on Saturday to discuss member states’ short and long-term strategies with respect to Iran.

Those states apparently have much more political cover for their diplomatic withdrawals than Iran does for the attacks that initiated them. The National contributed to this conclusion on Wednesday when it reported that the violation of the sovereignty of the Saudi embassy and consulate was a also a violation of United Nations conventions to which Iran is a signatory. This in turn helps to support the assessment of Woodrow Wilson Center scholar Aaron Miller, in an article published by CNN on Wednesday.

Miller concluded that Iran appeared to be the big loser in this current round of international tensions, and that Saudi Arabia was making gains, at least in the short term, as it utilized the embassy attack to further justify actions by the Gulf States in the absence of US leadership on the Iran issue. Saudi Arabia and its partners have been skeptical of US policy in the region since nuclear negotiations between Iran and the P5+1 began to lead to the lifting of former Western economic and political restraints on the Islamic Republic.

The Saudis have naturally been joined in their skepticism by a range of other parties who fear the consequences of empowering Iran. These include congressional Republicans, many Democrats, Israel, and the National Council of Resistance of Iran. Most of these critics of current Western policy are quick to place the blame for worsening sectarian tensions upon the Iranians.

Tehran, predictably, has taken the opposite position in the midst of the fallout from the embassy fire, with the Iranian foreign ministry blaming the Saudis for using the Nimr execution and the subsequent response to fuel general sectarian tensions, according to Leader Call. Furthermore, the New York Post pointed out that a number of Iranian news outlets had adopted a familiar strategy of much official Iranian state propaganda, putting forth conspiracy theories blaming foreign interlopers for events taking place among Iranians.

In the present case, these conspiracy theories intimate that Saudi Arabia itself, or perhaps Israel or the West, had masterminded the attack on the Saudi embassy and consulate, in order to contribute to the destabilization of the region. Leading Iranian officials have taken pains to distance themselves from the attack, but these denials are made suspect by the various threatening statements made by many of those same officials in the lead-up to and immediate aftermath of Nimr’s execution.

Radio Free Europe / Radio Liberty reported on Wednesday that in the days before the storming of the embassy, the Iranian Revolutionary Guard Corps had specifically threatened “harsh revenge” for the execution. Around the same time, Supreme Leader Ali Khamenei phrased these threats in more religious terms by predicting “divine vengeance” for the Saudis.

RFE/RL also points out that the notions of foreign sabotage and the protestors’ independence from the Iranian government are both undermined by the fact that those who stormed the embassy were generally not afraid of being identified, and were in fact happy to share images of their activities on social media. This seems to suggest that the perpetrators had – or believed they had – the support of the IRGC or other government entities and would not face consequences from security forces that are notorious for their repression of protests and peaceful gatherings. This explanation is supported in turn by the fact that this particular protest went on for an hour and a half before a police commander arrived on the scene.

So it seems likely that despite Tehran’s superficial criticisms of the embassy protestors and of Saudi sectarianism, the worsening sectarian conflict is being actively or tacitly supported by officials on the Iranian side. And fittingly, bilateral escalation is another major takeaway of this incident that was presented by Aaron Miller in his CNN editorial, and it is something that the US and Western powers are warning against, albeit without an articulated plan of action for prevention.

On the issue of Syria, the Obama administration has apparently drawn back from its former position of staunch opposition to the Assad regime, raising concerns that the US might be coming around to Iran’s side, if only to avoid damaging the rapprochement between the two traditional enemies.

A major concern for Western policymakers, therefore, is that the deterioration in relations between Iran and Saudi Arabia will seriously affect the dialogue over a political solution, in which the Saudis and Iranians are both expected to participate later this month during a new security conference in Geneva.

The embassy attack may further motivate Iran to dig in its heels on its anti-Assad position, while also motivating other Sunni states to provide greater support to Syrian rebels and other sources of opposition to Iran’s regional activities. But meanwhile, the Nimr execution and the general breakdown in relations with Sunni states could be exploited by the Iranians to drive recruitment for their Shiite proxy militias not only in Syria but also in Yemen, Bahrain, and elsewhere.

The Associated Press reported on Wednesday that Bahrain had made several arrests as it broke up a Shiite militant group with ties to the Iranian Revolutionary Guard Corps and the Tehran-controlled Lebanese paramilitary Hezbollah. Such reports presumably contribute to concerns regarding the sectarian conflicts that may be yet to come.

And Miller suggests that such conflicts, along with the general power struggle between Shiite Iran and Sunni Saudi Arabia will lead to serious challenges for the US “as it attempts to straddle a fence with insufficient credibility and influence with both sides.” So while it may be in America’s interests to bring the sectarian tensions under control, it will be extremely difficult for the US to do so without jeopardizing its relationship with one side or the other.

Meanwhile, it is not clear that there is any other global power that is prepared to step into the role of mediator. The Associated Press indicated on Wednesday that the only nation to make a specific offer along these lines was Iraq. But this is an implausible solution, as Iraq lacks the neutrality to mediate between its two neighbors, as well as the strength to enforce any supposed solution.

Although Saudi Arabia sent an ambassador to Baghdad last week for the first time in 25 years, the Shiite-dominated Iraqi government still maintains close ties with Tehran, as well as being influenced by numerous Iranian-supported Shiite militias operating inside the country and fighting against the Islamic State of Iraq and the Levant.

In absence of effective foreign intervention in this situation, it appears likely that Saudi-Iran relations will continue to deteriorate, possibly leading to a prolonged cold war, attempts at economic warfare, or an expansion of existing proxy conflicts. The long-term effects of such escalation are uncertain, but just as Miller observes that Iran is the short-term loser in the current situation, the Wall Street Journal concluded on Wednesday that Saudi Arabia would have a clear advantage in an economic war, such that if it was willing to absorb budget deficits of its own, it could potentially keep Iran’s oil prices to about half of the price assumed by Iran’s current-year budget.

This could be a source of significant economic pain for the Islamic Republic at a time when Tehran is anticipating a swift removal of US-led sanctions and a dramatic increase in oil exports to the global market. This is to say that notwithstanding the US’s commitment to rapprochement with Iran, the regional response to Iran’s provocations could still have the effect of counteracting very much of that rapprochement.