There are several things that can be said about this new bonhomie in Indian - KSA relations. These things are both long term and short term, positive and negative.
The immediate concern for KSA is the growing strength and intransigence of Iran. And I think that this is
the main reason that this deal has happened now. But it does not take away the fact that there are long term reason for India and KSA to come closer.
But first - Iran.
Recall that one of the reasons US bandied about for the Indo-US nuke deal was that India needs to be reassured about its fuel supplies before it will move away from Iran. This is true as far as it goes. The nuke deal may (or may not) supply us energy, but that will (or will not happen) in the long run. The US needs to attack Iran NOW. So, this deal comes in place to assure India of energy as an incentive to not stop the attack on Iran.
Earlier it was just the US pushing India away from Iran. Now, KSA has joined, given the urgency of the situation. The recent conflict in Yemen was just a wake up call for the Kingdom.
NOTE:
Contrary to popular opinion, the royal family's influence is not strong. They hold on to power more by balancing various factions within the kingdom, paying them off with money, institutions, contracts, etc. They are not despots, and do not have complete control over what happens in the kingdom - they can only do so with force, but that is not their first choice because violence strips away the facade of stability that the royal family needs to maintain.
Royal support for wahhabis is part of this internal balance of power.
Given that India is now assured (?) of fuel supplies, the US attack on Iran has crossed another red light.
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KSA's position on terror is not clear. While it has been a target of some minimalist terror attacks in the past, these have been linked to Al-Qaeda, not LET/Paki based organizations. I read their statement on anti-terror in TOI today, and it mentions Taleban and AQ, not any paki based orgs (like LET).
This is important to India because paki based terrorists are anti-India, while for AQ/Talibs, India is not even third priority (Israel, KSA, and US are - in that order). This illustrates that KSA's position on terror is the same as that of US and Pakistan - and will not help India much.
Current king - Abdullah, was known to be more pro-Islamist when he was crown prince, but after becoming king, he has pursued pro American policies. His current actual position on Islamism is not clear, but it can be hoped that he is a pragmatist. It will be in everybody's interest.
If he is a closet-Islamist, then he is against US policy, and may join hands with Taleban against US if it is in his interest to do so. Even a AQ-KSA understanding is not beyond imagination. All he has to do is profess sincere Islamist leanings, and OBL will forgive him. All is well onlee.
* KSA depends on US to provide security for the royal family and keep the oil flowing to the west. If they feel the US can no longer do that, they will re-align themselves in interesting ways.
* US uses KSA oil to keep Asian countries in its grip. US does not source its oil from the ME. Only US withdrawal from global cop duties will make them withdraw from the ME. This is not as unlikely a scenario as you might think. Do not bet on US remaining a superpower beyond 2020. Britain lost its pre-eminent position in 6 years.
* Iran is a proxy fight between US on one hand and Russia and China on the other. China more than Russia, because Russia has an interest in Iranian oil staying out of the market.
* Separating India from this group is a US long term strategy. My only wish for India is that we get paid well enough for helping US.
* Many moons ago, I had posted that the only two things Euro/West fears are civil war at home, and the military might of a 'temporary' (their word) master of Asia. An Asian Entente between the three Asian giants will bring the latter fear to life. That is why separating India from this group is necessary for the west.
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More later!