“The Cabinet has decided to approve the establishment of the Saudi-Iraqi Coordinating Commission and to delegate the Saudi minister of trade and investments to sign on behalf of the kingdom,” read a statement carried by state-run SPA news agency.
The two countries went a quarter century without diplomatic relations, which were cut following Saddam Hussein’s 1990 invasion of Kuwait after which Saudi Arabia served as the launchpad for a US-led coalition to oust Iraqi forces.
Iraq’s Energy Minister Jabbar Al Luaybi and his Saudi counterpart Khalid Al Falih last Thursday jointly announced they would strengthen their commitment to pledged oil production cuts and vowed to ensure coordination of their nations’ oil policies.
OPEC and non-OPEC members have pledged to cut back on production in an effort to stabilise market prices.
The rekindling of ties comes at a time of diplomatic crisis in the Gulf after Saudi Arabia cut all ties with neighbouring Qatar in June, accusing the emirate of supporting Islamist extremists and working with Shiite Iran.
Qatar, the world’s largest exporter of liquefied natural gas, has denied the allegations.