Saudi Crown Prince Mohammed bin Salman said the kingdom hopes for positive relations with Iran as long as it quits what he said was negative behaviour, as he employed a softer tone while speaking of his country's main rival in the region.
He also defended Saudi Arabia's role in the Yemeni conflict, and hoped the Iran-backed Houthi rebels would come to the negotiating table.
His remarks were made during an interview on national television late Tuesday marking five years since he launched his ambitious Vision 2030 plan that aims to diversify Saudi Arabia's economy.
"In the end, Iran is a neighbouring country. All we hope for is to have a good and special relationship with Iran. We want it to prosper and grow as we have Saudi interests in Iran, and they have Iranian interests in Saudi Arabia," he said.
"The problem we have is with its negative behaviour, whether it is its nuclear programme, support for illegal militias in some countries, or its ballistic missile programme," Mohammed added.
Iran insists its nuclear programme is for peaceful purposes, while other countries worry that it is trying to construct weapons.
The two countries severed diplomatic relations in 2016 and are currently facing off in multiple proxy conflicts, including in Yemen.
He said Saudi Arabia is working with partners in the region and the world to find solutions.
"We hope to overcome them and build a good and positive relationship with Iran that would benefit everyone," he said during the interview which lasted for around an hour and a half.
The crown prince's softer tone comes after media reports earlier this month that Saudi and Iranian officials have held talks in Baghdad.
He also said that Saudi Arabia has good relations with the administration of US President Joe Biden, as the two countries agree on 90 per cent of issues of mutual interest and are working to find a common understanding on the rest.
Biden has declared an end to US support for the military campaign in Yemen led by Saudi Arabia, which formed a coalition in 2015 to support government forces fighting the Iran-linked Houthis, who were expanding their control over large areas in Yemen.
The crown prince defended the decision to form the coalition, saying that "no country worldwide would accept to have militias at their borders, or an unlawful armed group at its borders."
He hoped that the Houthis would "prioritize their own and their country's interests" and agree to a ceasefire and sit at the negotiating table with other Yemeni parties.
In March, Saudi Arabia offered a new peace initiative to the Houthi rebels that would include a ceasefire supervised by the United Nations and the reopening of Sana'a airport.
The Houthis dismissed the proposal as "not serious."
During most of the interview, Mohammed spoke of the goals of his Vision 2030 project, which he launched in a bid to pivot away from dependence on oil production and towards other forms of investment including tourism.
He said the plan will create millions of jobs, including 6 million in the capital Riyadh alone, and increase housing projects.
After the kingdom's economy slowed down amid the coronavirus pandemic, he said he expects the kingdom will see a "V-shaped recovery" in 2021.
He also said Saudi Arabia is in talks to sell 1 per cent of its oil giant Aramco to a leading foreign energy company, without naming it.
As part of Vision 2030, the state-owned company sold 1.5 per cent of its shares in an initial public offering in 2019.