A month ago, Saudi Arabia pressured Lebanese premier Saad Hariri to step down in an audacious endeavour to rein in regional rival Iran. But the aftermath brought just the opposite.

Not only did Hariri rescind his resignation on Tuesday, but Riyadh's power play paradoxically led divided Lebanese factions to come together in order to avoid a political breakdown.

The Lebanese cabinet issued a joint statement on Tuesday to reaffirm their commitment to staying out of regional conflicts and apparently put an end to the month-long Hariri saga.

His resignation caught Lebanon and outside countries by surprise, and was seen as a direct result of the escalating power struggle between Riyadh and Tehran that has seen them square off from Syria to Yemen.

Saudi Arabia has supported Hariri for years, hoping he would fight back against what it sees as Iran's main instrument in the region -- Lebanon's powerful Shiite armed movement Hezbollah.

But in 2016, a landmark compromise deal in Lebanon cut across those political lines, bringing Hariri in as the head of a government that included Hezbollah ministers.

- 'We will punish Lebanon' -

By the time Hariri's premiership turned a year old, the Saudis had grown exasperated with Hezbollah's growing influence and threatened to push back financially, a source close to the premier said.

"When Hariri travelled to Saudi Arabia (in early November), he got a huge shock," the source said.

"He thought he was going to discuss economic projects. He found himself faced with a list of economic sanctions brandished by the Saudis against Lebanon."

Riyadh threatened to expel 160,000 Lebanese nationals working in the Gulf and force regional businessmen to withdraw their investments from Lebanon.

"This would have been catastrophic for the country. Hariri had his back up against the wall," the source said.

The 47-year-old premier wrote his own resignation announcement, crafting it in a way he thought would appease the Saudis.

"He was not a prisoner in the literal sense but the Saudis told him, 'if you go back to Lebanon, we'll think of you as Hezbollah, and your government as an enemy,'" the source told AFP.

"They said: 'We will punish Lebanon like Qatar,'" he said, referring to Saudi's months-long land, sea, and air blockade on Qatar.

Karim Bitar of the Paris-based Institute of International and Strategic Affairs said Riyadh's plan spectacularly backfired.

"The Saudis wanted to send a powerful message demonstrating their determination to push back on Iran's foray into the Levant," said Bitar.

"But it produced a real boomerang effect."

- 'Gone too far' -

After his resignation, Hariri spent two weeks in Riyadh amid furious speculation he was being held "hostage" there by Saudi authorities.

Eventually, he returned to Beirut, put his resignation on hold, and dove into consultations with political rivals.

On Tuesday, he held his first ministerial meeting since his return, declaring he had rescinded his resignation and that Lebanon remained committed to "disassociation," or neutrality in regional conflicts.

"As fictitious, provisional and fragile as it is, this forced rapprochement between the two Lebanese camps is necessary and welcome, since security and economic risks are real," Bitar said.

He expected Riyadh would continue demanding Hezbollah withdraw its forces from Yemen.

"The Saudis want more than just cosmetic concessions," Bitar warned.

"The Saudis have not said their last word yet. They're still determined to clip Iran's wings in the region."

Last week, Saudi foreign minister Adel Jubeir warned "there will not be peace" in Lebanon as long as Hezbollah stayed armed.

Riyadh, however, has also struggled to backpedal on its faux pas after Hariri's resignation sparked French and US interventions on his behalf.

Saudi Crown Prince Mohammed Bin Salman "realised he had gone too far... and that the operation resulted in Hariri regaining popularity," a French diplomatic source told AFP.

Another Western source told AFP that Riyadh remained "very reluctant" to back Hariri, now once again leading a cabinet that includes Hezbollah.

"They thought he would be able to counter Hezbollah. The opposite happened," the source said.

And the source close to Hariri said Saudi's crown prince was not necessarily wedded to the Lebanese premier.

"MBS isn't sentimental," the source said, using a popular nickname for Mohammed Bin Salman.

"With him, it's give and take. In his eyes, Beirut isn't more important than Riyadh," the source added, describing the heir to the Saudi throne as "the prince in a rush."

Questions remain over what Saudi's next move in Lebanon will be.

"Even Riyadh's closest allies in Lebanon fear Saudi's intransigence will cost the Lebanese economy dearly, without weakening Hezbollah much," said Bitar.

Back at the helm, Hariri will attend crisis talks in Paris on Friday with top foreign officials, including US Secretary of State Rex Tillerson.

But if the Saudis pursue their policy of "one-upmanship," Bitar warned, "France and Europe may not be able to do much to protect Lebanon from the escalating dangers on the regional level."