WASHINGTON – Gulf allies of Saudi Arabia severed ties with Iran on Monday in a show of solidarity with Riyadh, after Iranian protesters raided the Saudi Embassy in Tehran over the weekend.A riot erupted after Saudi Arabia executed Nimr al-Nimr, a Shi’ite sheikh, for “foreign meddling” in the Sunni kingdom.President of the predominantly Shi’ite Iran, Hassan Rouhani, condemned the violent ransackers on Saturday as extremists. But Bahrain, Sudan and the United Arab Emirates proceeded to downgrade their ties with Tehran, one day after Saudi Arabia’s lead.Each Gulf government characterized the decision as a reaction to aggressive Iranian foreign policy. But Iran accused Saudi Arabia of using the riot as an “excuse” to act on its sectarian inclinations.The escalating crisis threatens to deepen the Sunni- Shi’ite sectarian rift dividing the region, and risks prompting a new wave of violence across the Arab world.Several Shi’ite groups have vowed retribution for Nimr’s killing.“Pro-Iranian extremist groups in Iraq and Bahrain have threatened terrorist attacks if Nimr is executed, which he indeed has been,” said David Weinberg, a senior fellow at the Washington-based Foundation for Defense of Democracies. “The greatest concern is actually the possibility of violence in the Gulf.”Saudi officials say they plan on cutting all air traffic and commercial relations with Iran, in addition to ordering Iranian officials out of the country. While Bahrain and Sudan also cut all ties, the UAE only partially downgraded its relations.“The Arab world isn’t a venue for its blatant interference,” UAE Minister of State for Foreign Affairs Anwar Gargash said of Iran on Monday, explaining Abu Dhabi’s move. “Iran does not have guardianship or jurisdiction over a large number of Arabs for some sectarian reason.”Markets responded harshly to the crisis, unfolding in a part of the world where 20 percent of the world’s oil traverses each day. Oil prices briefly spiked as news broke that Gulf states would join Riyadh in protesting Tehran.A man was shot dead in Saudi Arabia’s Eastern Province late on Sunday, and two Sunni mosques in Iraq’s Shi’ite-majority Hilla province were also bombed in the fallout.While Rouhani condemned the escalation, Iran’s supreme leader, Ayatollah Ali Khamenei, posted a message on Twitter suggesting retribution against the Saudis.“Doubtlessly, unfairly spilled blood of oppressed martyr #SheikhNimr will affect rapidly,” the message read, using a trending hashtag for the late cleric. “Divine revenge will seize Saudi politicians.”In addition to the threat of new violence, the row poses new challenges to US-led diplomatic initiatives to halt the bloodletting in Syria and Yemen – both of which have played host to Saudi and Iranian proxy armies.“The Syria talks may not have been very promising, but they were the closest to ending the Syrian civil war we have ever come,” said Trita Parsi, founder and current president of the National Iranian American Council. “Saudi’s deliberate escalation – note that they unilaterally broke the Yemen cease-fire the same day they executed Nimr – certainly will complicate the Syria talks, if not end them altogether.” The White House echoed this concern, with one senior administration official warning that coordination in the fight against Islamic State – a threat to both countries – could suffer from the diplomatic breakdown.“We do continue to be concerned about the need for both the Iranians and the Saudis to deescalate the situation,” White House press secretary Josh Earnest said on Monday in his daily briefing with reporters. “We are urging all sides to show some restraint and to not further inflame tensions that are on quite vivid display in the region.”The US State Department issued concern “about rising tensions in the Middle East, of course, following recent executions in Saudi Arabia,” and “particular concern” over the execution of Nimr.“Solutions to problems in this region must come from leaders in this region,” State Department spokesman John Kirby said on Monday, condemning the decision of its Gulf allies to cut ties with Tehran as well as the attack on the Saudi Embassy. “We would like to see diplomatic engagement continue.”Secretary of State John Kerry spoke with Iranian Foreign Minister Javad Zarif, as well as Saudi Deputy Crown Prince Mohammed bin Salman al-Saud on Monday, Kirby said. The State Department expressed concern over – but did not condemn – Saudi Arabia’s legal system, saying that Nimr’s execution was only one of 47 that day.The US would not confirm whether or not Riyadh notified Washington in advance that Nimr, who was sentenced to death in 2014, would be killed. “We hope its not irreparable,” Kirby added, expressing hope that negotiations toward a cease-fire in Syria would continue on track. “The long-term solution to these kinds of tensions are going to be local solutions.”United Nations Secretary-General Ban Ki-moon made phone calls on Monday to both Zarif and Saudi Foreign Minister Adel bin Ahmed al-Jubeir with similar messages.Speaking to Zarif, Ban reiterated his “deep dismay” regarding the execution of Nimr. But he also recalled his condemnation of the attack at the Saudi Embassy in Tehran, and urged the foreign minister to take the necessary measures to “protect diplomatic facilities in the country.”In his conversation with Jubeir, the secretary- general reiterated his views on capital punishment but added that the attack on the Saudi Embassy in Tehran was “deplorable.”The announcement of a break in Saudi diplomatic relations with Tehran, he said, is “deeply worrying.”Danielle Ziri and Reuters contributed to this report.