BEIRUT/AMMAN – Saudi Arabia and Iran have agreed to work towards fully restore diplomatic relations, with the reopening of their embassies pending within days, according to an announcement on Friday by Iranian Foreign Minister Hossein Amirabdollahian, as reported by Reuters.
The move comes after a phone call between the foreign ministers of Iran and Saudi Arabia last week, on Eid al Fitr, during which they agreed to work on restoring diplomatic relations, following 7 years of strained relations.
In a statement by Rohullah Latifi, a spokesman for the Iranian Trade and Industry Ministry, carried by Anadolu Agency, Latifi highlighted that there more than USD 14 million (JOD 9.9 million) worth of steel exports have been shipped to Saudi Arabia since the beginning of the year.
Moreover, Tehran is said to have eyes on growing its USD 1 billion (JOD 710 million) trade portfolio with Saudi Arabia to USD 2 billion (JOD 1.4 billion), with focus on steel, saffron, carpets, cement and dried fruit, according to Farzad Piltan, West Asia director at Iran’s Trade Promotion Organization.
The relationship between the two countries started deteriorating in 2015 after Saudi Arabia and the UAE intervened in the Yemen war, to support the toppled, Saudi-backed government, and seized control of the capital, Sanaa, from the Iran-aligned Houthi movement.
Reopening the embassies suggests a possible thawing of relations and a move towards greater cooperation between the two nations, after an agreement was brokered by China earlier this year.
The two countries have historically been major players in the global oil market, and their cooperation could lead to a more stable oil market.
According to an International Monetary Fund (IMF) report from 2021, economic integration and cooperation between the members of the Gulf Cooperation Council (GCC) and neighbouring countries, including Iran, could result in a 1.5% increase in the collective Gross Domestic Product (GDP) of these countries.
In terms of oil and energy, optimal cooperation between Iran and Saudi Arabia alone could lead to increased efficiency and productivity by up to 400,000 barrels per day, a report by the Oxford Institute for Energy Studies published recently estimates.
