The agreement would see shuttered embassies reopen in Tehran and Riyadh, enable travel between the two countries, and co-operation to end the catastrophic conflict in Yemen. Iranian pilgrims will be able to attend the Hajj in Mecca for the first time since 2014.
Iran’s foreign minister, Hossein Amirabdollahian, said the agreement marked the beginning of “official diplomatic relations” with an “emphasis on stability… and development of the region”.
Saudi state media said that discussions focussed on “security, stability, and prosperity of the two countries and peoples”.
Relations between the two regional powers have been turbulent since Iran’s Islamic revolution of 1979, and were cut off entirely in 2016 after crowds attacked the Saudi embassy in Tehran.
Riyadh and Tehran have often been on opposite sides of conflicts in the region, including the wars in Syria and Yemen that have raged since 2011 and 2014, respectively.
Sources on both sides suggested that the agreement would pave the way to peace in Yemen.
Saudi political scientist Dr Hesham Alghannam said the parties had “reached an agreement to extend the armistice in Yemen until the end of December… The extension will be accompanied by the signing of a general framework for a political solution”.
The deal would also allow for a resumption of oil exports from Yemen that have been blocked by a Saudi embargo, the cause of what the UN calls “the world’s worst humanitarian crisis” with more than two million children suffering from malnutrition.
Dina Esfandiary, an Iran specialist at Brussels-based consultancy Crisis Group, described the agreement as “good progress” with the potential to alleviate the suffering in Yemen.
Analysts have pointed to the significance of China supplanting the US as broker for a Middle East peace deal. But Dr Esfandiary suggests that Beijing has taken a back seat.
“Most of the heavy lifting is being done by Iran and Saudi Arabia, less so China, whose broker or mediator status will really only be tested if one side doesn’t implement the agreement,” she told i.