Saudi-Israel peace push falters as Gulf realigns with Iran after war

Saudi-Israel peace push falters as Gulf realigns with Iran after war

Efforts by Israeli Prime Minister Benjamin Netanyahu and US President Donald Trump to broker peace between Israel and Arab states appear to be stalling, with Saudi Arabia pulling back from normalization amid shifting regional dynamics following Israel’s war with Iran, the Financial Times reported.

Before Hamas’s October 7, 2023 attack on Israel and the subsequent Gaza war, Saudi Arabia was inching toward a groundbreaking diplomatic deal with Israel in return for a US defence pact. But the Israeli assault on Gaza, and more recently on Iran, has hardened Riyadh’s stance and made it less likely to strike a deal anytime soon.

Saudi officials are now signalling that the political and reputational costs of aligning with Israel — especially without tangible progress for Palestinians — have grown too steep.

Shift in Saudi calculations

Crown Prince Mohammed bin Salman has voiced strong opposition to Israel’s actions in Gaza, describing them as “genocide,” and has stepped up ties with Iran, a regional rival with whom Saudi Arabia restored diplomatic relations in 2023. His priority now appears to be de-escalation and avoiding being drawn into broader regional instability.

“The Gulf states will maintain their rapprochement with Iran,” a source familiar with Saudi policy told the Financial Times, adding that this shift makes normalization with Israel “less likely” and increases pressure to secure meaningful concessions for Palestinians.

Saudi officials insist that any future deal with Israel must include a ceasefire in Gaza and credible steps toward the creation of a Palestinian state. That demand has found renewed resonance with the Saudi public, particularly younger citizens who are disillusioned by the images of destruction from Gaza.

A changed Middle East

Iran’s regional position has also evolved. Following a muted U.S. response to past attacks on Saudi oil infrastructure, Riyadh no longer sees confrontation with Tehran as a sustainable strategy. Instead, it has prioritized diplomatic outreach. Since March 2023, top Saudi and Iranian officials have been in regular contact, and military cooperation has increased, including talks between the Saudi defence minister and Iranian military leaders.

While Israel’s offensive may have weakened Iran’s regional proxies like Hizbollah, experts say it could push Tehran closer to pursuing a nuclear deterrent — and may reinforce views across the region that Israel is a destabilizing actor.

“The Iran of 2022 is not the Iran of 2025,” said Gregory Gause of the Middle East Institute. “The victorious Israel of 2025 looks to be a destabilising element of politics across the region.”

Trump’s ambitions and Gulf alternatives

President Trump, whose administration brokered the Abraham Accords in 2020 that saw the UAE and Bahrain normalize ties with Israel, is hoping to add Saudi Arabia to the list. He called such a move his “dream” and has been lobbying hard for it, including during a recent visit to Riyadh.

But with normalization on ice, Gulf leaders may instead offer economic incentives. During Trump’s May 2025 visit, Gulf states pledged trillions of dollars in investments aimed at strengthening ties with Washington and securing access to US defence systems and AI technologies.

Analysts say this economic engagement — rather than a rushed peace deal with Israel — may be the Gulf’s preferred route to maintain influence with Washington.

“The Saudis, unlike Trump, aren’t under the same time pressure,” said Hasan Alhasan of the International Institute for Strategic Studies. “They’re in a comfortable enough position geopolitically to avoid doing something they’re not ready for.”

Looking elsewhere

With Riyadh cautious, Israeli officials are exploring other diplomatic openings, including a limited “non-belligerence” pact with Syria’s new leadership under Ahmed al-Sharaa, seen as a quicker win in a complex region.

But as regional alliances shift and Gulf states hedge their bets, a grand Middle East realignment — once in sight — now appears increasingly elusive.