After the two regional rivals severed diplomatic ties seven years ago, Iran has reopened its embassy in Saudi Arabia.
According to Saudi-owned Al Arabiya TV, representatives from the Saudi and Iranian foreign ministries were present at the ceremony in Riyadh.
It was an indication that cooperation was "entering a new era," according to Alireza Bigdeli, Iran's deputy foreign minister.
It happens three months after a deal mediated by China led the Gulf states to agree to mend fences.
After crowds protesting against the kingdom's execution of a prominent Shia Muslim cleric stormed its embassy in Tehran in 2016, Saudi Arabia severed ties with Iran.
Iranian Foreign Minister Hossein Amir-Abdollahian expressed satisfaction with the "good progress made in bilateral ties" during a meeting with his Saudi counterpart Prince Faisal bin Farhan Al Saud last Friday in Cape Town.
The Saudi embassy in Tehran is set to reopen, and Prince Farhan confirmed that he will go there "soon," according to the Iranian foreign ministry.
The largest Shia Muslim nation, Iran, and Saudi Arabia, which considers itself to be the dominant Sunni Muslim power, have been engaged in a long-running conflict over control of the region. But in recent years, proxy wars in the Middle East have heightened their rivalry.
Saudi Arabia has been aiding pro-government forces in Yemen since 2015 as they fight the Houthi rebel movement. The Houthis, who have attacked Saudi cities and oil infrastructure with missiles and drones, have denied receiving weapons from Iran.
In addition, Iran has been charged by Saudi Arabia with interfering in Lebanon and Iraq, where Iranian-backed Shia militias have consolidated significant political and military power, attacking cargo and oil tankers in the Gulf, and planning a missile and drone attack on significant Saudi oil facilities in 2019. The attacks on the ships and oil facilities have been denied by Iran.
While US Secretary of State Antony Blinken was in Saudi Arabia, the Iranian embassy was reopened. He's anticipated to discuss Iran, oil prices, Chinese and Russian influence in the region, and the prospect of Saudi Arabia and Israel mending fences.
