Iran and Saudi Arabia are near agreement to restore diplomatic relations by reopening consulates, a diplomatic source has told AFP news agency on Monday.

The foreign diplomat who resides in Saudi Arabia said an agreement to ease tensions is imminent.

"They, in principle, have reached an agreement to reopen consulates... and I think an announcement of normalization of ties may come in the next few weeks," the diplomat told AFP on condition of anonymity.

The two Middle Eastern arch-rivals began talks in April with Iraqi mediation in Baghdad and have continued discussions since then. Iran has made optimistic statement in recent days, saying the talks “are on the right path”.

Iran’s foreign ministry said on Monday that Yemen, a major contentious issue between the two countries, is part of the talks.

The new government in Tehran headed by hardliner president Ebrahim Raisi has emphasized that Iran’s priority is improving relations with its neighbors. This could be related to Western pressure on Iran to change its regional policies and stop creating tension with meddling in Arab countries.

Saudi Arabia, which supported former US president Donald Trump’s decision to pull out of the 2015 nuclear agreement and impose ‘maximum pressure’ sanctions against Iran, wants Iran to stop supporting armed proxies in the region, including the Houthis in Yemen.