Negotiations between Anglo-Persian Oil company and Teymourtash go even worse and fall apart in ~1930. Standard Oil are invited in to counterbalance the British, find oil, and licence on more equitable terms than the Brits, leading to the eventual Persian-American oil co becoming a cash cow for Iran, funding lots of development.
Frightened by loss of Persian monopoly, Britain tears up the red line agreement and plays hardball to get and keep rights in Saudi, helped by their many years of bankrolling Ibn Saud.
After WW2, the Saudis want a better deal but the British are bankrupt and can't afford to give up the cash, while american interests are focused in Iran. In 1950 all foreign oil interests are nationalized. An attempted British intervention fails messily with huge political fallout across the Arab middle east as a wave of nationalism sweeps the region.
Without foreign expertise, the inept and corrupt Saudi monarchy faces growing dissatisfaction and increasingly falls back on its other long term supporters in the Wahhabi movement.
By 1980 Iran is a prospering but authoritarian state with strong ties to the US, and Saudi Arabia is a feudal backwater exporting almost as much fundamentalist rhetoric as oil. Saddam Hussein wishes to aggrandize Greater Iraq, but his eastern neighbour is far too strong. However, to the south there are huge expanses of territory, vast underexploited oil reserves, and a lot of criticism directed at Baathism. Surely a few obsolete brigades and a few zealot mullahs will not be much of an obstacle....