Yemen's internationally recognised government and UAE-backed separatists have signed a power-sharing deal to halt infighting.
Saudi Crown Prince Mohammed bin Salman announced the agreement between the Yemeni government and southern separatists to end a power struggle in the war-torn country's south, Saudi state TV reported on Tuesday.
Crown Prince Mohammed described the "Riyadh Agreement" as a crucial step towards a political solution to end Yemen's bloody four-year war.
"This agreement will open a new period of stability in Yemen. The kingdom of Saudi Arabia stands with you," the Saudi crown prince said at a signing ceremony in Riyadh aired on state television.
"It's a joyful day in Saudi as the two sides come together."
The agreement will result in a government reshuffle to include the separatists with equal representation, and their armed forces will be placed under government control.
All military and security forces will be incorporated into the defence and interior ministries.
Peter Salisbury, Yemen expert at the Crisis International Group, a Brussels-based think-tank, said the agreement solves two short-term problems - if it can be successfully implemented.
It prevents a war-within-a-war between the southern separatists and Hadi's government. It also provides more credibility to future government negotiations with the Houthis.
However, Salisbury cautioned the deal "is loosely worded and open to interpretation ... and sets an ambitious timeline for implementation".
Saudi crown prince describes agreement as a crucial step towards a political solution to end Yemen's bloody war.