Saudi Arabia continues to condition any normalization with Israel on a credible pathway toward Palestinian statehood, including East Jerusalem as capital—a position reiterated by Riyadh through mid-2026 without signs of flexibility. The Gaza conflict and associated Israeli policies have elevated Saudi perceptions of risks over benefits, reinforced by domestic public opposition and assessments that closer ties could destabilize regional standing. Recent U.S.-Saudi nuclear cooperation talks, including July 2026 announcements linking elements to Abraham Accords progress, have not altered this stance despite Israeli efforts and U.S. pressure. Weakened Iranian threats have further reduced shared security incentives, while Saudi Arabia pursues alternative alignments and security arrangements. With formal talks stalled since 2023 and no scheduled events or leadership shifts likely to bridge the Palestinian gap before the 2027 deadline, trader consensus reflects these entrenched barriers to a near-term breakthrough.