Iran on Thursday welcomed a "change of tone" from Saudi Arabia that could clear the way to a new era of cooperation between the rival regional powers.
The Islamic republic has been "a pioneer on the path to regional cooperation and welcomes the change of tone from Saudi Arabia", said foreign ministry spokesman Saeed Khatibzadeh.
Saudi Crown Prince Mohammed bin Salman called Tuesday in a television interview for "a good and special relationship" with Tehran, after sources said the two countries had held secret talks in Baghdad.
Khatibzadeh, in a statement, said that "by adopting constructive stances... the two countries... can enter a new chapter of interaction and cooperation to reach peace, stability and regional development, by overcoming differences".
The neighbouring countries, locked in a fierce struggle for regional dominance, cut ties in 2016 after Iranian protesters attacked Saudi diplomatic missions following the kingdom's execution of a revered Shiite cleric.
The Saudi crown prince has previously lashed out at Tehran, accusing it of fuelling regional insecurity.
The talks in Baghdad, facilitated by Iraqi Prime Minister Mustafa al-Kadhemi, remained secret until the Financial Times reported that a first meeting was held on April 9.
An Iraqi government official confirmed the talks to AFP, while a Western diplomat said he had been "briefed in advance" about the effort to "broker a better relationship and decrease tensions".
Riyadh has officially denied the talks in its state-backed media, while Tehran has stayed mum, asserting it has "always welcomed" dialogue with Saudi Arabia.
The initiative comes at a time of shifting power dynamics, as US President Joe Biden seeks to revive the tattered 2015 nuclear deal that was abandoned by Donald Trump.
Saudi Arabia and Iran have backed opposite sides of several regional conflicts, from Syria to Yemen, where a Saudi-led coalition is fighting the Huthi rebels.
Iran supports the Huthi rebels, who are battling the Saudi-led military coalition that intervened in Yemen's war in 2015.
The rebels have also stepped up drone and missile strikes on Saudi targets, including its oil facilities.
In his interview, Prince Mohammed renewed calls for a ceasefire and negotiations with the rebels.
A day later, Iran's Foreign Minister Mohammad Javad Zarif met the Yemeni rebel spokesman in Oman, reiterating Tehran's support for a ceasefire and a return to talks to end the country's conflict.
At the talks with Huthi spokesman Mohammed Abdul Salam, Zarif "once again stressed our country's view regarding the political solution being the only solution to the crisis of Yemen", the Iranian foreign ministry said.
On Thursday, Zarif tweeted of what he called "good signs" at the end of a Gulf tour.