Saudi Arabia and Iraq plan to open the Arar border crossing for trade for the first time since 1990, when it was closed after the countries cut ties following Saddam Hussein's invasion of Kuwait.
Saudi and Iraqi officials toured the site on Monday and spoke with Iraqi religious pilgrims, who for the past 27 years had access to the crossing only once annually during the Hajj season, the Mecca newspaper reported.
The governor of Iraq's south-western Anbar province, whose staff was on hand for the ceremonies, said the Iraqi government had deployed troops to protect the desert route leading to Arar and called its opening a "significant move" to boost ties.
"This is a great start for further future co-operation between Iraq and Saudi Arabia," said Sohaib Al Rawi.
The announcement follows a decision by the Saudi cabinet on Monday to establish a joint trade commission with Iraq.
Saudi Arabia and the UAE have both held a series of high-level meetings with Iraqi officials in recent weeks as relations improve.
Both countries have hosted Iraqi Shiite cleric Moqtada Al Sadr for talks, rare visits after years of troubled relations.
Mr Al Sadr's office said his meeting with Saudi Crown Prince Mohammed bin Salman resulted in an agreement for Saudi Arabia to donate US$10 million (Dh36.7m) in aid to the Iraqi government and study possible investments in Shiite regions of southern Iraq.
The opening of border crossings for trade was also on a list of goals for the talks published by Mr Al Sadr's office.
Mr Al Sadr commands a large following among the urban poor of Baghdad and southern Iraq, and is one of few Iraqi Shiite leaders to keep some distance from Iran.
The Saudi-Iraqi rapprochement extends back to 2015, when Saudi Arabia reopened its embassy in Baghdad following a 25-year break.
Saudi Foreign Minister Adel Al Jubeir visited Baghdad in February, and the two countries announced in June they would set up a co-ordination council to upgrade ties.
