Saudi Arabia has agreed to join the Chinese-led Shanghai Cooperation Organization as a "dialogue partner", according to state media, on Wednesday, in a new sign of the Gulf kingdom's growing ties with the giant Asian country.

The Saudi Council of Ministers approved the decision in a session chaired by Saudi King Salman bin Abdulaziz on Tuesday, the Saudi Press Agency reported.

The move grants Riyadh "the status of a dialogue partner in the Shanghai Cooperation Organization," which is based in Beijing.

The Shanghai Organization was established in 2001 as a political, economic and security organization for Central Asia in the face of Western institutions.

In addition to China, the organization includes eight member states: Russia, India, Pakistan, Kazakhstan and other countries of the former Soviet Union in Central Asia.

It also includes other countries that have the status of observer or partner in the dialogue, such as Iran, Egypt and Qatar.

Saudi Arabia's accession comes less than three weeks after the disclosure of an important agreement sponsored by Beijing to resume diplomatic relations between Saudi Arabia and Iran after a seven-year break.

Iran and Saudi Arabia, two regional rivals, have been embroiled in regional proxy disputes, most notably the war in Yemen.

Riyadh made it clear that despite its involvement in previous rounds of bilateral talks with Tehran, the mediation of Chinese President Xi Jinping formed a "bridge" between the two prominent regional powers in the Gulf.

China's intervention raised questions given the kingdom's historically close partnership with the United States, despite the strained relationship over issues including the kingdom's human rights record and the oil production cut approved by OPEC Plus last year.

Saudi Arabia and Iran are preparing to reopen their embassies in Tehran and Riyadh, with a meeting between the two countries' foreign ministers expected before the end of Ramadan, Saudi media reported Monday.

In Washington, US State Department spokesman Vedant Patel downplayed the importance of the move, noting that it had been expected for a long time.

"Every country has its own relationships," Patel said.

On Tuesday, Xi hailed the recent improvement in relations between Iran and Saudi Arabia, during a phone call with Saudi Crown Prince Mohammed bin Salman, the country's de facto ruler.

In his first comment on the agreement, Xi stressed that the China-sponsored dialogue "will play a major role in promoting regional unity and solidarity."