Saudi Arabia's Foreign Minister Adel bin Ahmed Al Jubeir Image Credit: Reuters

Germany and Saudi Arabia have agreed on Tuesday to enter a new phase in relations after a diplomatic dispute that had soured ties between the two countries.

At the UN General Assembly in New York, German Foreign Minister Heiko Maas said Germany regrets the "misunderstanding" that prompted Saudi Arabia to withdraw its ambassador in November 2017.

"In recent months, our relations have witnessed a misunderstanding which stands in sharp contrast to our otherwise strong and strategic ties with the Kingdom of Saudi Arabia and we sincerely regret this," German Foreign Minister Heiko Maas said alongside his Saudi counterpart, Adel Al Jubeir, at the United Nations, where leaders are gathered for the annual General Assembly.

"We should have been clearer in our communication and engagement in order to avoid such misunderstandings between Germany and the kingdom," he said.

Saudi Foreign Minister Adel Al Jubeir said he welcomed Maas's statement and invited him to the kingdom to intensify their ties, reported Saudi press agency.

The spat began when Germany's foreign minister at the time, Sigmar Gabriel, said Saudi Arabia was meddling in Lebanon's political affairs, describing Saudi foreign policy as "adventurism" in the Middle East.

Those comments were perceived as an attack on Saudi policies, by Riyadh. With the new Crown prince, Saudi has increasingly made it clear that it would not tolerate reprimands.

Saudi Arabia has recalled its ambassador to Germany at the time in protest over “incorrect” remarks.

 “Such remarks provoke the surprise and disapproval of the Kingdom of Saudi Arabia which considers them as aimless and based on false information and would not help in bringing about stability in the region,” stated Saudi Arabia’s ministry of foreign affairs in an official statement at that time.

As the dispute damaged business ties between Saudi Arabia and its largest European trading partner, German exports to Saudi Arabia fell 5 per cent in the first half of 2018.

"We'll do our best to make this partnership with the Kingdom even stronger than before," Maas said.

German Chancellor Angela Merkel has been trying to ease tensions, speaking to Saudi Crown Prince Mohammad Bin Salman by telephone.

Inputs from Reuters