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Saudi or other Arab backing for the increasingly armed opposition could escalate matters further, potentially producing a sectarian civil war lasting years and spilling across borders into neighboring states.

"A proxy Saudi-Iranian war in Iraq represents a very considerable threat to oil supplies," said Alastair Newton, chief political analyst at Japanese bank Nomura.

Some of the increased friction with its neighbors could be a symptom of a power struggle within Iran itself, Newton said."I think one of the reasons you're seeing temperature rising between Iran and others is because you're seeing temperature rising in Tehran itself."Recent events such as the embassy storming, in which Iran seemed willing to tear up the international rulebook, could be a sign of increasing clout of hardline clerics and Revolutionary Guard commanders.The attack on Britain's embassy prompted widespread international condemnation and looks to have ushered in a much tighter sanctions. That too may strengthen the hardliners.

Last year's Stuxnet computer worm, which damaged computers used in industrial machinery, was widely believed to have been a U.S.-Israeli attack to cripple Iranian nuclear centrifuges.Several Iranian nuclear scientists have been killed or disappeared, and Iran blames U.S. or Israeli intelligence services.

Two explosions last month in Iran, one of which killed a Revolutionary Guards gunnery general and around a dozen other officers, prompted widespread speculation in Israel that its intelligence services were involved.

The U.S. withdrawal from Iraq makes it possible for Israeli jets to pass through its airspace without needing U.S. permission.