Members of the Izala movement, backed by mainly Sunni Muslim Saudi Arabia, last month attacked the Islamic Movement in Nigeria (IMN), which is sympathetic to Shiite majority Iran.
IMN ceremonies in at least four northern cities to mark the annual Shiite day of mourning, Ashura, were targeted, with the worst riots in Kaduna, an Izala stronghold. At least two IMN supporters were killed.
Witnesses and local media said mobs who looted and set fire to homes and businesses over two days shouted "No more Shiites".
Sectarian tensions in Nigeria's Muslim-majority north had already been running high, especially in Kaduna, after the state government banned the IMN as an unlawful group and a security threat days earlier.
That followed a recommendation from the judicial inquiry it commissioned to investigate clashes in Zaria city last December in which soldiers killed more than 300 IMN members.
Those clashes and the recent escalating tension indicate that the proxy Saudi-Iran conflict -- well-known in places such as Lebanon, Yemen and Syria -- is now being played out in Nigeria, experts said.
"It is a fact that Saudi Arabia has been financing anti-Shia campaigns in many areas of the world," political scientist Abubakar Sadiq Mohammed, from Ahmadu Bello University in Zaria, told AFP.
"If the attacks against the Shiites escalate, of course Iran will support them and Saudi Arabia will support the attacks on Shiites."
- Partisan support -
Izala leader Abdullahi Bala Lau has been accused of stoking anger by declaring that Nigeria's constitution only recognises Sunni Islam.
His group has close relations with Riyadh and Nigeria's government while its satellite television station, Manara, also broadcasts fiery anti-Shiite rhetoric.
Leaders from Saudi Arabia and Iran both contacted Nigeria's President Muhammadu Buhari after the Zaria attacks.
Iran's President Hassan Rouhani called for restraint and accused "a group" of "sowing the seeds of discord among Muslims in Islamic countries" in what was seen as a clear reference to Saudi Arabia.
Nigerian media reported that Saudi King Salman backed Abuja's crackdown on the IMN, describing it as a "fight against terrorism".
The Sunni jihadists of Boko Haram have killed at least 20,000 people in northeast Nigeria since taking up arms against the government in 2009.
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Riyadh has largely refrained from openly backing Nigeria's fight against the ultra-conservative Salafist rebels but Mohammed noted it was "quick to do so in the case of IMN".
"The responses of Iran and Saudi to the Zaria clashes belie sectarian undercurrents," he added.
In March, Saudi clerics attended an Izala-organised conference on "deviant Islamic ideologies" in Nigeria and have since been preaching in the country.
In May, Iran's envoy to Nigeria called for the release of IMN leader Ibrahim Zakzaky and described his detention as "unfair", straining diplomatic ties. He was later recalled to Tehran.
- Power and influence -
A senior Nigerian security officer said IMN's religious beliefs were immaterial but its alleged disregard for law and order was an issue, as was its lack of recognition of the Nigerian state.
IMN started out as a student movement in 1978 and morphed into a Sunni revolutionary group inspired by the Islamic revolution in Iran in 1979.
The group switched to Shia Islam in 1996 due to Zakzaky's close association with Iran, worsening mutual resentment with conservative Wahhabists, including Izala, which was founded in 1978 by a Saudi-trained cleric.
Islamic history expert Dahiru Hamza said Izala's focus had up to then been against those in the mystical Sufi tradition, whose beliefs they considered heretical.
"They shifted their focus on Shiites who were getting more organised and challenging the Salafi influence by winning more converts in the territory under the Salafi control," he added.
Izala received funding from Saudi Arabia and wealthy adherents, allowing it to establish mosques and schools. It also encouraged members to participate in politics, gaining government allies.
- Banning order -
Izala's preaching against IMN and Shia Islam has increased since last December. It openly supported the military crackdown in Zaria and even called for harsher action.
Lau dismisses claims he is fuelling tensions as a smear campaign.
At least five northern states have followed Kaduna's example in banning the IMN from holding public processions.
"The ordinary people took the ban on IMN as a ban on Shia (Islam) because IMN is the more prominent Shia group due to its public activities like street procession," said the editor of the Shia newspaper Ahlulbayt, Muhammad Ibrahim.
"This worried us because we saw how Izala followers were spreading the information that the government banned Shia and the people began to believe it."