Saudi Arabia joins most of the other Arab nations in severing diplomatic relations with Egypt after the signing of the Egyptian-Israeli peace agreement on March 26, 1979, although Khalid reacts moderately to Egyptian President Anwar el-Sadat's Israeli peace initiative.

Domestic unrest continues with rioting by Shi'ite Muslims in eastern Saudi Arabia in 1979.

The establishment of the (Shi'ite) Islamic Republic of Iran causes the Saudi monarchy serious concern.