Iraq and Saudi Arabia on Wednesday signed 13 political and economic agreements in a sign of improving ties between the two countries after 25 years of estrangement.
The development comes as Prime Minister Adel Abdul Mahdi arrived in the Saudi capital Riyadh leading a high-level delegation of senior ministers and business leaders.
The Iraqi leader was welcomed by Saudi King Salman.
Before the visit, Mr Abdul Mahdi said relations between Iraq and Saudi Arabia had entered a new stage.
“We are facing major shifts in our relations with Saudi Arabia,” he said in Baghdad on Tuesday evening.
“Iraq wants to develop relations with Saudi Arabia in all fields. This will bring security and stability to the region.”
Mr Abdul Mahdi said the exchange of high-level visits “creates great opportunities” between the two countries.
King Salman praised the warming of relations, and stressed the importance of Riyadh and Baghdad “finding a common ground”.
Baghdad is walking a thin line between Iran and the Arab world, and its relations with the kingdom have been turbulent.
The kingdom cut relations with Baghdad after it invaded Kuwait in 1990.
But reconciliation between the two countries began in 2015, when Saudi Arabia reopened its embassy in Baghdad on April 4, after 25 years.
Consular services were not resumed until then and Iraqis applying for visas had to go through the Saudi embassy in Jordan.
This month, the kingdom announced that it would fund the construction of a $1 billion (Dh3.67bn) sports city in Iraq.
Saudi Arabia said it would open three more diplomatic missions in the country.
On April 3 a ministerial delegation led by the Saudi Minister of Commerce and Investment, Majid Al Qasabi, attended the second meeting of the Saudi-Iraqi Co-ordination Council in Baghdad.
Mr Al Qasabi said Iraq presented 186 investment opportunities to the kingdom. This was the minister’s second trip to Baghdad in three weeks.
Trade delegations have travelled back and forth between the two states during the past few months.
Work between officials is also under way to open a border crossing between Baghdad and its southern neighbour.
In October 2017, two months before Iraq declared victory over ISIS, the countries established the council to help rebuild devastated areas liberated from the militants.
Baghdad is also seeking economic benefits from closer ties with Riyadh and other Gulf states as it tries to address demands for reform and curb corruption.