Dubai, United Arab Emirates (AP) — Iran and Saudi Arabia agreed Friday to reestablish diplomatic relations and reopen embassies after seven years of tensions. The major diplomatic breakthrough negotiated with China lowers the chance of armed conflict between the Mideast rivals — both directly and in proxy conflicts around the region.

The deal, struck in Beijing this week amid its ceremonial National People’s Congress, represents a major diplomatic victory for the Chinese as Gulf Arab states perceive the United States slowly withdrawing from the wider Middle East. It also comes as diplomats have been trying to end a long war in Yemen, a conflict in which both Iran and Saudi Arabia are deeply entrenched.

The two countries released a joint communique on the deal with China, which brokered the agreement as President Xi Jinping was awarded a third five-year term as leader earlier Friday

Iranian state media posted images and video it described as being taken in China. It showed Ali Shamkhani, the secretary of Iran’s Supreme National Security Council, with Saudi national security adviser Musaad bin Mohammed al-Aiban and Wang Yi, China’s most senior diplomat.

“After implementing of the decision, the foreign ministers of the both nations will meet to prepare for exchange of ambassadors,” Iranian state television said. It added that the talks had been held over four days.

The joint statement calls for the reestablishing of ties and the reopening of embassies to happen “within a maximum period of two months.”

In the video broadcast by Iranian media, Wang could be heard offering “wholehearted congratulations” on the two countries’ “wisdom.”

“Both sides have displayed sincerity,” he said. “China fully supports this agreement.”

China, which last month hosted Iran’s hard-line President Ebrahim Raisi, is also a top purchaser of Saudi oil. Xi visited Riyadh in December for meetings with oil-rich Gulf Arab nations crucial to China’s energy supplies.

Iran’s state-run IRNA news agency quoted Shamkhani as calling the talks “clear, transparent, comprehensive and constructive.”

“Removing misunderstandings and the future-oriented views in relations between Tehran and Riyadh will definitely lead to improving regional stability and security, as well as increasing cooperation among Persian Gulf nations and the world of Islam for managing current challenges,” Shamkhani was quoted as saying.

Shortly after the Iranian announcement, Saudi state media began publishing the same statement.

Tensions have been high between Iran and Saudi Arabia. The kingdom broke off ties with Iran in 2016 after protesters invaded Saudi diplomatic posts there. Saudi Arabia had executed a prominent Shiite cleric days earlier, triggering the demonstrations.

The execution came as Crown Prince Mohammed bin Salman, then a deputy, began his rise to power. The son of King Salman, Prince Mohammed at one point compared Iran’s Supreme Leader Ayatollah Ali Khamenei to Nazi Germany’s Adolf Hitler, and also threatened to strike Iran.

In the years since, tensions have risen dramatically across the Middle East since the U.S. unilaterally withdrew from Iran’s nuclear deal with world powers in 2018. Iran has been blamed for a series of attacks in the time since, including one targeting the heart of Saudi Arabia’s oil industry in 2019, temporarily halving the kingdom’s crude production.

Though Yemen’s Iranian-backed Houthi rebels initially claimed the attack, Western nations and experts have blamed it on Tehran. Iran long has denied launching the attack. It has also denied carrying out other assaults later attributed to the Islamic Republic.

Beyond the regional politics, religion also plays a key role. Saudi Arabia, home to the cube-shaped Kaaba that Muslims pray toward five times a day, has long portrayed itself as the world’s leading Sunni nation. Iran’s theocracy meanwhile views itself as the protector of the Islam’s Shiite minority.

The two powerhouses also have competing interests elsewhere, such as in the turmoil now tearing at Lebanon and in the rebuilding of Iraq after decades of war following the U.S.-led 2003 invasion that toppled Saddam Hussein.

Kristian Ulrichsen, a research fellow at Rice University’s Baker Institute who long has studied the region, said Saudi Arabia reaching the deal with Iran came after the United Arab Emirates reached a similar understanding with Tehran.

“This dialing down of tensions and de-escalation has been underway for three years and this was triggered by Saudi acknowledgement in their view that without unconditional U.S. backing they were unable to project power vis-a-vis Iran and the rest of the region,” he said.

Prince Mohammed, now focused on massive construction projects in his own country, likely wants to finally pull out of the Yemen war as well, Ulrichsen added.

“Instability could do a lot of damage to his plans,” he said.

The Houthis seized Yemen’s capital, Sanaa, in September 2014 and forced the internationally recognized government into exile in Saudi Arabia. A Saudi-led coalition armed with U.S. weaponry and intelligence entered the war on the side of Yemen’s exiled government in March 2015. Years of inconclusive fighting created a humanitarian disaster and pushed the Arab world’s poorest nation to the brink of famine.

A six-month cease-fire in Yemen’s war, the longest of the conflict, expired in October despite diplomatic efforts to renew it. That led to fears the war could again escalate. More than 150,000 people have been killed in Yemen during the fighting, including over 14,500 civilians.

In recent months, negotiations have been ongoing, including in Oman, a longtime interlocutor between Iran and the U.S. Some have hoped for an agreement ahead of the holy Muslim fasting month of Ramadan, which will begin later in March. Iran and Saudi Arabia have held off-and-on talks in recent years, but it wasn’t immediately clear if Yemen was the impetus for this new detente.

Previous rounds of talks between Saudi and Iranian officials had been brokered by Baghdad and held in Iraq, but stalled last year. Iraq’s new government is perceived as closely linked to Iran, although Iraq has attempted to maintain relations with both sides.

In a statement following Friday’s announcement, the Iraqi foreign ministry welcomed the deal and said previous mediation by Iraq had established a “solid base” for the later talks and agreement in China, which gave a “qualitative impetus to cooperation for the countries of the region.”

The U.S. Navy and its allies have seized a number of weapons shipments recently they describe as coming from Iran heading to Yemen. Iran denies arming the Houthis, despite weapons seized mirroring others seen on the battlefield in the rebels’ hands. A United Nations arms embargo bars nations from sending weapons to the Houthis.

A Yemeni rebel spokesman, Mohamed Abdulsalam, appeared to welcome Friday’s deal in a statement that also slammed the U.S. and Israel. “The region needs the return of normal relations between its countries, through which the Islamic society can regain its lost security as a result of the foreign interventions, led by the Zionists and Americans,″ he wrote online.

It remains unclear, however, what this means for America. Though long viewed as guaranteeing Mideast energy security, regional leaders have grown increasingly wary of Washington’s intentions after its chaotic 2021 withdrawal from Afghanistan. The U.S. State Department did not immediately respond to a request for comment over the announced deal.