ABSTRACT
This chapter explores the two countries' (Saudi and Iran) relationship in the first two years of Rouhani's presidency. It focuses on the entrenched legacy of Ahmadinejad, great powers' agreement over Iran's controversial nuclear dossier, the rise of the Islamic State (formerly ISIS) or locally called Daesh, and King Abdullah's death. The chapter explains the impact of oil politics and the rising tension of the two countries over the market share and a cut in production to support prices following the sharp decline in oil price. Rouhani's ascendancy to power brought a flash of hope for the reorientation of Iran's foreign policy. Under Rouhani, the salience of oil politics resurfaced in the relationship between Iran and Saudi Arabia. There was so much acrimony between the two countries over the oil issue that Rouhani went on to call the abrupt decrease in oil prices a plot hatched by the enemies against the regional people and Muslims.
