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.

Videos on Iranian state media 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.

The joint statement calls for reestablishing ties and reopening embassies to happen “within a maximum period of two months.” A meeting by their foreign ministers is also planned.

In the video, Mr. Wang could be heard offering “wholehearted congratulations” on the two countries’ “wisdom.”

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

The United Nations welcomed the Saudi-Iranian rapprochement and thanked China for its role. “Good neighborly relations between Iran and Saudi Arabia are essential for the stability of the Gulf region,” U.N. spokesperson Stephane Dujarric told reporters at U.N. headquarters.

China, which last month hosted Iran’s hard-line President Ebrahim Raisi, is also a top purchaser of Saudi oil. Mr. 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 Mr. 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,” Mr. Shamkhani said.

Mr. Al-Aiban thanked Iraq and Oman for mediating between Iran and the kingdom, according to his remarks carried by the state-run Saudi Press Agency.

“While we value what we have reached, we hope that we will continue to continue the constructive dialogue,” the Saudi official said.

Tensions long have been high between Iran and Saudi Arabia. The kingdom broke ties with Iran in 2016 after protesters invaded Saudi diplomatic posts there. Saudi Arabia had executed a prominent Shiite cleric with 46 others days earlier, triggering the demonstrations.

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

Since then, the U.S. unilaterally withdrew from Iran’s nuclear deal with world powers in 2018. Iran has been blamed for a series of attacks after that, 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 blamed Tehran. Iran denied launching the attack and also denied carrying out other assaults later attributed to the Islamic Republic.

Religion also plays a key role in their relations. 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 Islam’s Shiite minority.

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

The leader of the Iranian-backed Lebanese militia and political group Hezbollah, Hassan Nasrallah, praised the agreement as “an important development” that could “open new horizons” in Lebanon, Syria and Yemen. Iraq, Oman and the United Arab Emirates also praised the accord.

Kristian Coates 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 at home, likely wants to finally pull out of the Yemen war as well, Mr. Ulrichsen added.

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

The Houthis seized Yemen’s capital, Sanaa, in 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 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, the longest of the Yemen conflict, expired in October despite diplomatic efforts.

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

Yemeni rebel spokesman Mohamed Abdulsalam appeared to welcome the 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.

For Israel, which has wanted to normalize relations with Saudi Arabia despite the Palestinians remaining without a state of their own, Riyadh easing tensions with Iran could complicate its own regional calculations.

Israeli Prime Minister Benjamin Netanyahu, under pressure politically at home, has threatened military action against Iran’s nuclear program as it enriches closer than ever to weapons-grade levels. Riyadh seeking peace with Tehran takes one potential ally for a strike off the table. Mr. Netanyahu’s government offered no immediate comment Friday to the news.

It remains unclear, however, what this means for the U.S. 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.

However, the White House bristled at the notion that a Saudi-Iran agreement in Beijing suggests a rise of Chinese influence in the Mideast.

“I would stridently push back on this idea that we’re stepping back in the Middle East—far from it,” National Security Council spokesman John Kirby said.

He added: “It really does remain to be seen whether the Iranians are going to honor their side of the deal. This is not a regime that typically honors its word.”

Mark Dubowitz, head of the Foundation for the Defense of Democracies, which opposes the Iran nuclear deal, said renewed Iran-Saudi ties via Chinese mediation “is a lose, lose, lose for American interests,” noting: “Beijing adores a vacuum.”

But Trita Parsi of the Quincy Institute, which advocates engagement with Iran and supports the nuclear deal, called it “good news for the Middle East, since Saudi-Iranian tensions have been a driver of instability.” He added that “China has emerged as a player that can resolve disputes rather than merely sell weapons to the conflicting parties,” noting a more stable Middle East also benefits America.