I wrote my undergrad thesis on a similar topic, so brace yourself for a novel:

It's difficult to say exactly, but 1979 was definitely a time of crisis for Saudi Arabia. Remember that the revolution in Iran and the Soviet invasion of Afghanistan also took place that year. Each of these events—the Grand Mosque seizure, the emergence of a rival Islamic regime in Iran, and the invasion of a Muslim country by a communist-atheist superpower—challenged Saudi legitimacy in a different way. More than the siege itself, Saudi Arabia's attempts to reassert its legitimacy contributed to the rise of radical forms of militant Islamism over the following decades.

To understand the ideological impulse behind the Grand Mosque seizure, we need to consider what had been happening to Saudi Arabia during the 1960s and 70s. There's a tendency to see the country as medieval or frozen in time, but this isn't accurate. Saudi Arabia was going through a series of destabilizing transformations. The kingdom's increasing oil wealth was funneled into construction, development, and reform efforts that rapidly changed the face of Saudi society. This was beneficial in certain ways, but it also contributed to a great deal of unease. Conservative Wahhabis found it difficult to reconcile Saudi Arabia's Islamic pretensions with its growing decadence. They were suspicious of the reforms introduced by kings like Faisal, who was assassinated in 1975. They were increasingly resentful of their government's relationships with countries like the United States. These feelings began to find their expression in a reactionary sort of religious ideology. Oil income and the pace of development picked up during the 1970s, so it's appropriate that all of this came to a head toward the end of that decade.

That's the broader context of the Mecca siege. Now for its significance. I like to think of the incident as a two-pronged attack on Saudi Arabia's religious legitimacy. By targeting Mecca, Juhayman and his followers undermined Saudi claims to be the rightful stewards of Islam's holiest site. By couching their criticism of the regime in the language of Wahhabism, the attackers challenged the regime's commitment to its own official ideology. Juhayman criticized the regime for "making religion a means to guarantee their worldly interests, putting an end to jihad, paying allegiance to the Christians (America) and bringing over Muslims evil and corruption" (Hegghammer & Lacroix 2007). Even if they had grounds to criticize his methods, the Saudi royals must have sensed that Juhayman's grievances were all valid from a Wahhabi perspective.

The Saudi response to this challenge is what contributed to the rise of extremism. As I said before, the nature of the response was shaped by other challenges. Like Juhayman, the new clerical regime in Iran attacked Saudi Arabia's Islamic pretensions. Finally, at the very end of 1979, the USSR invaded Afghanistan. A Muslim land had been invaded by an atheistic aggressor. This was a crucial moment for Saudi Arabia. Official rhetoric had championed "Islamic solidarity" for years, but Juhayman had explicitly questioned the regime's commitment to this principle when he charged it with "abandoning jihad." Now, after its legitimacy had come under attack at home and from abroad, Saudi Arabia had a chance to prove its commitment and shore up its legitimacy.

The Saudi government took every measure to facilitate the participation of its citizens in the anti-Soviet jihad. In addition to being a much-needed source of legitimacy, Afghanistan became an outlet for the country's religious zeal. The unease generated by the pace of change at home was refocused and sent abroad. Saudi religious propaganda became more militant and alarmist, directing attention toward "outside forces" that were "systematically [oppressing]" the Muslim ummah (Hegghammer 2008). At home, too, legitimacy-building reforms followed the crises of 1979. The public sphere was Wahhabized. Cinemas and other sinful establishments were shuttered. The mutawi’in, the country’s religious police, became more active and better equipped to enforce gender segregation and public piety. Other reforms increased the stature of Muslim Brotherhood ideologues and other foreign Islamists, who built followings as preachers or by teaching in the country's religious universities. In these lecture halls and on Afghanistan's front lines, Wahhabi puritanism mixed with pan-Islamist militancy and certain ideas borrowed from thinkers like Sayyid Qutb, who had argued that most Muslim political leaders were in fact apostates and infidels. The result was a dangerous new form of Islamism that came to be represented by organizations like al-Qaeda—formed, not coincidentally, by a Saudi fighter in Afghanistan and an Islamist preacher who had taught in Saudi Arabia. The rise of this extremism was one of the unforeseen results of Saudi Arabia's legitimacy-building attempts.

Sources and further reading:

Thomas Hegghammer & Stéphane Lacroix, “Rejectionist Islamism in Saudi Arabia: The Story of Juhayman Al-ʿUtaybi Revisited,” International Journal of Middle Eastern Studies 39, no.1 (Feb 2007): 103-122

Thomas Hegghammer, Jihad in Saudi Arabia: Violence and Pan-Islamism since 1979 (Cambridge: Cambridge University Press, 2010)

Yaroslav Trofimov, The Siege of Mecca: The 1979 Uprising at Islam's Holiest Shrine (New York: Anchor Books, 2007)

Madawi Al-Rasheed, Contesting the Saudi State: Islamic Voices From a New Generation (New York: Cambridge University Press, 2006)