"And all of this is a distraction from the more serious issue in the middle east, which is the Sunni-Shia conflict, where the west has for some reason (maybe an oil-based reason) decided to side with the Sunni and, Israel has followed suit."

In reality it is Iran that is the that is the reason for Israel to "cosy up" to Saudi. Iran is 95% Shia. It is not simply religion but the political affiliations that have resulted from the Shia/Shiite split.
Israel has nuclear weapons and are terrified at the thought that another regional power may have had them. Until Israel learns that diplomacy is not at the end of a gun barrel then stability in the Middle East is non achievable. Every major power has had to negotiate with "terrorists", what makes the regional bully on the block so different?