WASHINGTON—U.S. authorities said Tuesday they had charged two men in an Iranian-directed plot to assassinate the Saudi Arabian ambassador to the U.S. The alleged assassination plot would represent an escalation in the confrontation between mostly Shiite Iran and mostly Sunni Saudi Arabia, two longtime Middle East rivals. The charges are also a rare instance of Washington accusing Iranian groups of fomenting terrorism on U.S. soil. Elements of the Iranian government were ready to spend $1.5 million to hire what they believed was a drug-cartel hit squad from Mexico, said U.S. Attorney General Eric Holder. Prosecutors filed several criminal charges against...