Beijing | Weeks after China brokered a landmark peace deal between Iran and Saudi Arabia, Chinese President Xi Jinping on Tuesday said he expects both countries to improve their ties as arch-rivals in the Middle East faced an array of challenges to implementing it.

Xi in his phone conversation with Saudi Crown Prince and Prime Minister Mohammed bin Salman said it is hoped that Saudi Arabia and Iran will uphold the spirit of good neighbourliness and continue to improve their relations on the basis of the results of their talks in Beijing, official media here reported.

China is ready to continue to support the follow-up process of the Saudi-Iranian talks, Xi said, referring to the China-negotiated peace deal between the arch-rivals to end their hostilities.

The agreement signed on March 11 in Beijing was regarded as a major diplomatic coup for China's efforts to emerge as a major power rivalling the US to enlarge its strategic influence especially in the Middle East.

"The Iran-Saudi rapprochement has been touted as a momentous development in the region. But how it ultimately impacts the Middle East remains a very open question, as the long adversarial powers are fighting a proxy war in Yemen and continue to support opposing sides across the region," said a report by the US Institute of Peace.

"Amid perceived US retrenchment from the Middle East, the deal is a diplomatic win for China as it increasingly seeks to present an alternative vision to the US-led global order," it said.

Following the Iran-Saudi deal, Xi during his March 20 visit to Russia made a strong pitch for Russia-Ukraine peace talks to end their current war.

In his phone call with the Saudi Crown Prince, Xi said with the joint efforts of China, Saudi Arabia and Iran successfully held and achieved significant results, helping the two countries to improve their relations.

It is a significant demonstration effect on enhancing the unity and cooperation of regional countries and easing regional tensions, and thus having been widely praised by the international community, he said.

It is hoped that Saudi Arabia and Iran will uphold the spirit of good neighbourliness and continue to improve their relations on the basis of the results of their talks in Beijing, Xi said, adding that China is ready to continue to support the follow-up process of the Saudi-Iranian talks.

As Xi and Crown Prince Mohammed held talks for the successful implementation of the deal, both countries appear to be building a "more meaningful" relationship with a landmark USD 10 billion deal to construct a state-of-the-art refining complex in north-eastern Liaoning province.

Under the deal announced on Sunday, Riyadh will invest in the integrated refinery and petrochemicals complex to consolidate energy ties amid uncertainty over Russian supplies, the Hong Kong-based South China Morning Post reported on Tuesday.

For now, analysts expect China to continue buying heavily discounted Russian crude, but there are fears that US-led sanctions against Russia for its war in Ukraine “could greatly disrupt the global oil supply chain, leading to big price fluctuations”, Joey Zhou, a Shanghai-based petrochemicals analyst, told the Post.

"We expect Middle Eastern companies would be willing to participate in [more] joint ventures with Chinese firms to ensure they have a secure outlet for their oil,” he said.

"To obtain a more competitive position for feedstock costs, Chinese producers are also likely to welcome Saudi or Emirati funds by involving them in existing or new plans for integrated refinery and petrochemical complexes,” Zhou said.