As U.S. President Barack Obama seeks to reinvigorate his administration’s policy in the Middle East, he will have to contend with several issues where U.S. influence is less than overwhelming.

Chief among them, according to Middle East analysts, is the growing assertiveness of Saudi Arabia as it confronts Iranian influence in the region and tilts away from its historic bargain with the U.S.: oil for security.

In recent months, the Saudis have essentially taken the gloves off — sending troops into Bahrain to prop up the island’s Sunni monarchy against a rebellious Shiite majority; consolidating their relationship with Pakistan as a regional counterweight to Iran; and expanding the Gulf Cooperation Council (GCC) to reinforce the club of Sunni monarchies.

Through the GCC Saudi Arabia has also moved to resolve the crisis in Yemen, its neighbor to the south, where al Qaeda is establishing a foothold and where the Saudis suspect Iranian meddling.

Their core mission, says Ian Bremmer, president of the Eurasia Group, “is to ensure stability in their neighborhood.” Bremmer believes “the single most important long-term implication of the Arab Spring may be a consolidated GCC that is tacking away from the West.”

At the same time, the Saudi kingdom’s relations with the United States have deteriorated — in part over the Obama administration’s support for pro-democracy movements in the Arab world. On two occasions in recent months, according to well-placed sources in the Gulf, King Abdullah of Saudi Arabia even refused to meet senior U.S. officials.

Earlier this week, Saudi grievances were laid out in a Washington Post op-ed by Nawaf Obaid, a consummate insider and a senior fellow at the King Faisal Center for Research and Islamic Studies. Describing a “tectonic shift” in the Saudi-U.S. relationship, he complained of an “ill-conceived response to the Arab protest movements and an unconscionable refusal to hold Israel accountable” for its settlement-building in Palestinian territories. On the latter issue, he said the U.S. “had lost all credibility.”

Obaid also echoed some of the criticisms made last year by Prince Turki al Faisal, a former ambassador to the United States who said that “negligence, ignorance and arrogance” had cost America the “moral high ground” it held after 9/11.

Saudi alienation from Washington predates the Obama administration. Riyadh saw the invasion of Iraq as a disaster because it unleashed Shiite influence in a country traditionally dominated by its Sunni minority. Several Saudi officials have described Iraqi Prime Minister Nuri al Maliki — who leads a Shia-dominated government — as an “Iranian agent.”

The Saudis also complained that the Bush administration had “dropped the ball” on the Israel-Palestinian peace process by not endorsing King Abdullah’s plan for a two-state solution, with east Jerusalem as the Palestinian capital. That, they argued, had only strengthened more radical forces in the region, such as Hamas and Hezbollah.

Above all, the Saudi establishment has long been anxious that the threat it perceives from Iran is not adequately acknowledged in Washington.

U.S. diplomatic cables obtained by WikiLeaks and published last year showed growing Saudi impatience with U.S. caution toward Iran’s nuclear program, with King Abdullah quoted as urging Gen. David Petraeus to “cut off the head of the snake” during a meeting in April 2008. A year later, the King is quoted as telling President Obama’s counterterrorism adviser, John Brennan, that he hoped the U.S. would review its Iran policy and “come to the right conclusion.”

So now, Obaid writes, “Riyadh intends to pursue a much more assertive foreign policy, at times conflicting with American interests.”

One long-time observer of Saudi policy says the kingdom is preparing to use its wealth and economic growth (forecast at nearly 6% this year, thanks to the rising price of crude oil) to lead an expanded bloc as old certainties wither away.

The Saudis plan to spend $100 billion to modernize their armed forces, buy a new generation of combat aircraft and add 60,000 Interior Ministry troops. Like other Gulf states, Saudi Arabia also plans to expand its special forces.

Beyond its borders the kingdom wants to expand the six-member Gulf Cooperation Council, until now a club of wealthy monarchies, by inviting Jordan and Morocco to join. They might not have much money, but they, too, are ruled by Sunni monarchs and have — by regional standards — cohesive and well-trained armies.

In return, Gulf largesse would help support their weak economies. Amid recriminations and confusion in the Arab League — whose planned Baghdad summit has just been postponed for a whole year — the Saudis see the GCC as the institutional antidote to the upheavals of the Arab Spring.

Saudi Arabia has already created a $20 billion fund to assist Bahrain and Oman. And the dispatch of some 1,000 troops to Bahrain in March served notice to Tehran that Saudi Arabia would not tolerate a Shiite-dominated state a few miles off its coast.

“Sending a force to Bahrain was a necessary evil for the GCC in order to protect the monarchy in Bahrain,” says Theodore Karasik of the Institute of Near East and Gulf Military Analysis. “If a monarchy falls in the region, this might create a domino effect.”

It was also a slap in the face to U.S. policy in the region, which was focused on coaxing dialogue in Bahrain. Just days before the Saudi intervention, U.S. Defense Secretary Robert Gates was in Bahrain urging King Hamad to take more than “baby steps” towards reform.

That followed alarm in Riyadh over the Obama administration’s desertion of long-time ally Hosni Mubarak, who had cultivated close ties with the Gulf states and who was regarded by the Saudis as another Arab bulwark against “Iranian expansionism.” The U.S. eventually told Mubarak it was time to go, but the Saudi royal family supported him to the end, even offering to make up for any cut in U.S. aid.

Bremmer of the Eurasia Group says the United States does hold important cards — through multi-billion-dollar arms contracts and long-established relationships in the oil industry. And regional analysts say that ultimately Saudi Arabia would likely appeal for and get U.S. help in any showdown with Iran.

Bremmer says that much in the Gulf revolves around personal relationships and loyalties, and he says the Obama administration needs to invest more in that, starting at the top. By contrast, senior executives in U.S. oil companies — by and large no fans of the president’s energy policy — do talk with the Saudis.

In the longer-term, a Saudi tilt to the East may simply reflect new economic realities. Some 55% of Saudi oil now flows to Asia, compared with about 10% that flows to the United States. The Saudi state oil firm has built refineries in China, and trade between the two countries was worth $40 billion in 2010.

As relations with the West fray, Bremmer concludes that “a far-reaching Saudi-China strategic partnership could well result alongside expanded Chinese contracts to buy long-term access to Saudi oil and Chinese investment in developing Saudi infrastructure.”

Motorcycle-riding assassins have gunned down a Saudi diplomat in the Pakistani city of Karachi, four days after a grenade attack on the Saudi consulate there.

The unusual spate of attacks raised questions about whether they were in reprisal for the death of Saudi-born Osama bin Laden or the consequence of regional Sunni-Shia tensions triggered by upheaval in Bahrain.

A senior police officer said the diplomat, named as Hassan al-Khatani and described as a security officer, was shot dead in his car on Monday morning by two men riding a motorbike who fired four shots from a 9mm pistol.

Television pictures showed a luxury sedan with gunshots through its windows. Police said a backup team of assailants rode alongside the killers, indicating a degree of professionalism in the hit.

On Thursday unidentified assailants threw two grenades at the front gate of the consulate, damaging the entrance but injuring nobody.

Attacks on diplomats from Saudi Arabia are rare in Pakistan, thanks to the country’s close relationship with the army and the widespread reverence towards the country as the home of Islam.

“We’ve always had sectarian tensions but rarely an attack on a Saudi diplomat like this,” said defence analyst Ayesha Siddiqa.

But decades-old Shia-Sunni tensions in Karachi have been reignited by turmoil across the Arabian sea in Bahrain, where Saudi Arabia deployed troops last March to help quell an uprising by mostly Shia demonstrators.

Pakistani Shias became angry when it emerged that a private security firm was urgently recruiting hundreds of former soldiers to work for the Bahrain security forces and help with the crackdown.

Newspaper advertisements sought Pakistanis with experience in “security” and “riot control”.

A senior police officer in Karachi told the Guardian the Bahrain connection was considered the most likely motive for the two most recent attacks. But they were investigating whether they may have been in reprisal for the US special force raid that killed Bin Laden on 2 May.

Riyadh stripped Bin Laden of his citizenship in 1994 and has since co-operated closely with American efforts to crack down on al-Qaida, even though private Saudi citizens have been accused of sponsoring his network.

US intelligence is currently examining a trove of computer drives snatched from Bin Laden’s hideout, reportedly containing 2.7 terabytes of data, for further information about al-Qaida’s money pipeline.

A third possibility was that the attacks were linked to local criminal groups, the officer said. In recent years, he said, “some low-level officials at the consulate had been found to be involved in minor criminal activities with local mafias”.

The difficulty of investigating the killing is underscored by the general insecurity in the sprawling port city of 16 million people, where ethnic, political and Islamist militant groups hold sway in pockets of the city that are virtually out-of-bounds to the security services.

Malaysian premier Najib Razak says his country is willing to send peacekeepers to help “de-escalate tension” in Bahrain while backing Saudi Arabia’s role in resolving regional unrest.

Bahraini authorities in the kingdom ruled by a Sunni dynasty have attempted to curb violent protests in recent months inspired by uprisings that toppled Egypt’s and Tunisia’s presidents.

“Malaysia stands ready to contribute peacekeepers to the Kingdoam of Bahrain, if invited to do so by the Bahraini leadership,” Najib said in a statement late Friday following a meeting with Saudi Arabian monarch King Abdullah in Riyadh.

“Malaysia will consider it a great honour to offer assistance in this noble effort.”

He said Malaysia, a Sunni Muslim-majority nation, supported the national dialogue process launched by Crown Prince Salman bin Hamad Al-Khalifa in a bid to “de-escalate tension in the country.”

On March 16, security forces drove mostly Shiite protesters out of central Manama’s Pearl Square and demolished their camp after King Hamad declared a state of emergency.

The King also called in Saudi-led Gulf troops to boost his security force.

Bahrain authorities said 24 people, including four policemen, were killed in the unrest with the kingdom coming under strong criticism from international human rights organisations for its heavy-handed crackdown.

Iranian police dispersed hundreds of youths Tuesday at an Asian Champions League match between Iranian and Saudi sides protesting Saudi military aid to Bahrain in crushing a pro-democracy movement.

At the match between Iran’s Persepolis and the Saudi team Al-Ittihad, some 300-400 youths dressed in black and carrying Bahraini flags began protesting. They were first rounded up and isolated in a section of the stands before being expelled from the stadium shortly after the second half began.

The protesters, some of whom were arrested, shouted “Death to the Al-Sauds” and “Death to the Al-Khalifas” in reference to the ruling dynasties in Saudi Arabia and its tiny neighbour Bahrain.

Saudi Arabia had already unsuccessfully sought to have the match, won 3-2 by Persepolis, to be played in another country for security reasons.

Iran is a predominantly Shiite Muslim country that repeatedly expressed its solidarity with protesters in Bahrain, a Shiite majority country, as they demanded reforms from the Sunni Muslim dynasty ruling them.

In mid-March, a Saudi-led Gulf military force entered Bahrain at its government’s request. That freed up Bahraini security forces to crush the protest movement.

Manama, for its part, accused Tehran of supporting the demonstrations.

One of Iran’s top military commanders warned Saudi Arabia that it’s decision to send forces to Bahrain to quell protests by Shiite Muslims would spark unrest at home, a semiofficial Iranian news agency reported.

Gen. Hasan Firouzabadi, head of Iran’s joint chiefs of staff, didn’t offer any evidence to back up his claim. But his comments reflected growing tension between Shiite-majority Iran and Sunni-dominated countries in the Gulf like Saudi Arabia.

Iran has repeatedly denounced Gulf leaders for dispatching a Saudi-led military force in March to prop up Bahrain’s Sunni monarchy and try to quell the protests by Shiites, who comprise 70 per cent of the population but are excluded from key government and security posts.

“Unfair and unIslamic moves will hurt the honour of Muslims in Saudi Arabia, and it will threaten the security of Saudi Arabia,” Firouzabadi was quoted as saying by the Mehr news agency.

Firouzabadi, who is known for his anti-Saudi rhetoric, also lashed out at the United States, claiming Washington was behind Riyadh’s move into Bahrain so that it could preserve an American naval base there.

“Washington ordered Saudi Arabia as its mercenary to thwart the Bahrainis’ popular revolution so that the U.S. can maintain its base,” Firouzabadi was reported as saying.

Again, he offered no evidence to back up his claim.

Firouzabadi lashed out at Arab countries on Saturday as well, according to the official IRNA news agency.

“The Arab dictatorial regimes in the Persian Gulf are unable to contain the popular uprisings,” he was reported as saying. “The dictators should relinquish power, end their savage crimes and let the people determine their own future instead of … opening an unworkable front against Iran.”

Authorities in Saudi Arabia have detained two Shi’ite bloggers this week for taking part in demonstrations in the country’s oil-producing Eastern Province, a Shi’ite website and activists said on Wednesday.

The Sunni Muslim monarchy of Saudi Arabia, the world’s top oil exporter and major U.S. ally, does not tolerate any form of dissent. It has not seen the kind of mass uprisings other countries in the region have over the past few months.

But minority Shi’ite Muslims in the Eastern Province, who have long complained of discrimination — a charge the government denies — have staged small demonstrations, which have led to some protesters being detained.

Shi’ite website, www.rasid.com, said on Wednesday police had stormed the houses of Mustafa al-Mubarak, 26, and Hussein al-Hashem, 25, arrested them and confiscated their computers,

The website also said a 58-year-old man named Samir Aldahim was also detained for taking part in the demonstrations.

A spokesperson for the Eastern Province police could not be reached for comment.

“The series of arrests are still continuing today,” said one activist who declined to be named for fear of being detained.

“Even ordinary people have been detained for taking part in demonstrations. They are summoned while at work or taken from their homes,” he said.

A Human Rights Watch report issued this month said Saudi Arabia had arrested over 160 activists since February.

“In this last week there were no less then 10 detentions, and they were all transferred to jail. Their families believe it is because they have participated in demonstrations,” the activist said.

Leading Saudi Shi’ite clerics called on Thursday for protesters to end two months of demonstrations in the kingdom’s oil-producing Eastern Province, in an apparent bowing to government demands.

In at least two eastern towns, however, young Shi’ites ignored the call and took to the streets again to demand the release of prisoners and political reforms, activists said.

Inspired by Arab uprisings in Egypt or Tunisia, Saudi Shi’ites have been staging small protests in the Eastern Province, defying a demonstration ban and government pressure.

The Sunni Muslim monarchy of Saudi Arabia, the world’s top oil exporter and major U.S. ally, does not tolerate any form of public dissent and the kingdom has not seen the mass uprisings seen in other countries in the region.

After meeting government officials, leading Shi’ite clerics issued a statement asking activists to end demonstrations.

“We urge our beloved brothers … to calm the streets for the sake of brotherly cooperation that will help achieve our demands,” said the statement signed by 51 Shi’ite clerics and other personalities.

“We stress our demands to officials to address the issues and deliver on legitimate rights raised by a group of young people.”

A Shi’ite activist said the statement would probably not halt protests as young people were demanding reforms promised for years.

“It might reduce the number of protestors but I don’t think it will end it,” said the activist, who declined to be identified for fear of reprisals.

Saudi Shi’ites have long complained of difficulties getting government jobs and benefits enjoyed by the country’s majority Sunni population, a charge denied by Riyadh.

On Thursday, dozens of Shi’ites staged protests in the main Shi’ite city of Qatif and neighbouring village of Awwamiya, an activist said.

Saudi authorities have been increasingly nervous about protests, arresting participants and making independent travelling for journalists more difficult in the Eastern Province.

More than 160 Saudi activists have been arrested since February, Human Rights Watch said in a report this week.

On Sunday, Saudi authorities arrested a Shi’ite Muslim intellectual al-Saeed al-Majid, two days after protests in the Eastern Province.

Iran warned Saudi Arabia on Monday of the dire consequences of Riyadh’s intervention in Bahrain.

Supreme Leader Ayatollah Ali Khamenei’s adviser for military affairs, Maj. Gen. Yahya Rahim Safavi, told journalists, “The presence and attitude of Saudi Arabia (in Bahrain) sets an incorrect precedence for similar future events, and Saudi Arabia should consider this fact that one day the very same event may recur in Saudi Arabia itself and Saudi Arabia may come under invasion for the very same excuse.”

A post-U.S. Iraq renders the Saudi kingdom vulnerable to a future Iranian invasion.

The remarks made by Safavi, who formerly served as commander of Iran’s elite military force, the Islamic Revolutionary Guards Corps (1997-2007), constitute the first time Tehran has issued such a direct warning. The Saudis and the Iranians have had tense relations since the founding of the Islamic republic in 1979 and increasingly so since the U.S. invasion of Iraq toppled the Baathist regime, which led to a Shiite-dominated Iraqi state and the empowering of Iran. But never before has Iran issued a public statement about an invasion of the Saudi kingdom.

So, why is the Persian Shiite state engaging in such threats now? The Saudi move to intervene in neighboring Bahrain, where popular unrest was largely waged by the Shiite majority, threatened to topple a Sunni monarchy. Well aware of the implications, the Saudis embarked on their first long-term, overseas military deployment, sending in 1,500 troops to help Bahraini forces crush the Shiite opposition.

The Saudi move succeeded in quelling the unrest (for now at least), which placed Iran in a difficult position. Lacking the capability to physically aid their fellow Shia in the Persian Gulf, the Iranians were caught in an awkward situation. Iran had to do more than issue diplomatic statements and engineer protests against the Saudis and their allies.

Warning the Saudis that they too could be invaded on the same pretext that they used to go into Bahrain is definitely an escalation on the part of the Iranians. Since Iran making good on its threat is unlikely to happen anytime soon (given that the United States would not stand by and allow Iran to attack Saudi Arabia), this can be argued as yet another hollow threat. A more nuanced examination of the situation, however, suggests that Tehran is not just simply engaging in bellicose rhetoric.

Instead, Iran is trying to exploit Saudi fears. The Wahhabi kingdom fears instability (especially now when it is in the middle of a power transition at home and the region has been engulfed by popular turmoil). The clerical regime in Iran sees regional instability as a tool to advance its position in the Persian Gulf region.

Riyadh can never be certain that Tehran won’t ever attack but Iran would have to overcome many logistical difficulties to make good on its threat. The Saudis are also not exactly comfortable with the idea of overt military alignment with the United States. The last time the Saudis entered into such a relationship with the Americans was during the 1991 Gulf War and it lead to the rise of al Qaeda.

Put differently, any conflict involving Iran entails far more risks than rewards for the Saudis. Cognizant of the Saudi perceptions, the Iranian statement is designed as a signal to the Saudis that they should accept Iran as a player in the region or be prepared to deal with a very messy situation. The key problem for Saudi Arabia is that Tehran doesn’t have to actually resort to war to achieve its ends. But Riyadh’s efforts to counter Iran and its Arab Shiite allies are likely to create more problems for the Saudis because crackdowns are contributing to long-term instability in the region and causing agitation among the Shia, which Iran can use to its advantage.