By Laila Bassam and Aziz El Yaakoubi
BEIRUT/RIYADH (Reuters) -Syria and Saudi Arabia have agreed to reopen their embassies after cutting diplomatic ties more than a decade ago, three sources with knowledge of the matter said, a step that would mark a leap forward in Damascus's return to the Arab fold.
Contacts between Riyadh and Damascus had gathered momentum following a landmark agreement to re-establish ties between Saudi Arabia and Iran, a key ally of President Bashar al-Assad, a regional source aligned with Damascus said.
The re-establishment of ties between Riyadh and Damascus would mark the most significant development yet in moves by Arab states to normalize ties with Assad, who was shunned by many Western and Arab states after Syria's civil war began in 2011.
The two governments were "preparing to reopen embassies after Eid al-Fitr", a Muslim holiday in the second half of April, a second regional source aligned with Damascus told Reuters.
The decision was the result of talks in Saudi Arabia with a senior Syrian intelligence official, according to one of the regional sources and a diplomat in the Gulf.
The Saudi government's communication office, the kingdom's foreign ministry and the Syrian government did not respond to requests for comment.
Saudi state television later confirmed that talks were ongoing with the Syrian foreign ministry to resume consular services, citing a Saudi foreign ministry official.
The sources spoke on condition of anonymity due to the sensitivity of the subject.
The apparently sudden breakthrough could indicate how the deal between Tehran and Riyadh may play into other crises in the region, where their rivalry has fuelled conflicts including the war in Syria.
The United States and several of its regional allies, including Sunni-led Saudi Arabia and Qatar, had backed some of the Syrian rebels. Assad was able to defeat the insurgency across most of Syria thanks largely to Shi'ite Iran and Russia.
The United States, an ally of Saudi Arabia, has opposed moves by regional countries to normalise ties with Assad, citing his government's brutality during the conflict and the need to see progress towards a political solution.
When asked about the rapprochement, a State Department spokesperson said the U.S. "stance on normalisation remains unchanged" and that it would not encourage other countries to normalise ties with Assad.
ARAB LEAGUE SUSPENSION
The United Arab Emirates, another strategic U.S. partner, has led the way in normalising contacts with Assad, recently receiving him in Abu Dhabi with his wife.
But Saudi Arabia has been moving far more cautiously.
The Gulf diplomat said the high-ranking Syrian intelligence official "stayed for days" in Riyadh and an agreement was struck to reopen embassies "very soon".
One of the regional sources identified the official as Hussam Louqa, who heads Syria's intelligence committee, and said talks included security on Syria's border with Jordan and the smuggling of captagon, an amphetamine for which there is a thriving market in the Arab Gulf, from Syria.
Syria was suspended from the Arab League in 2011 in response to Assad's brutal crackdown on protests.
Saudi's foreign minister Prince Faisal bin Farhan Al Saud earlier this month said engagement with Assad could lead to Syria's return to the Arab League, but it was currently too early to discuss such a step.
The diplomat said the Syrian-Saudi talks could pave the way for a vote to lift Syria's suspension during the next Arab summit, expected to be held in Saudi Arabia in April.
The United Arab Emirates reopened its embassy in Damascus in 2018, arguing Arab countries needed more of a presence in resolving the Syrian conflict.
While Assad has basked in renewed contacts with Arab states that once shunned him, U.S. sanctions remain a major complicating factor for countries seeking to expand commercial ties.