Saudi Arabia has maintained that normalization with Israel requires a credible, irreversible pathway to Palestinian statehood with East Jerusalem as its capital, a condition Israeli governments have explicitly ruled out amid ongoing conflicts in Gaza and the West Bank. Recent regional developments, including the 2026 Iran war, Israeli operations in Lebanon and Syria, and sustained Arab public opposition—reflected in surveys showing near-universal rejection of ties—have reinforced Riyadh’s stance and raised the perceived risks of alignment. U.S. efforts, such as conditioning a civilian nuclear agreement on Abraham Accords accession, have not altered Saudi calculations. With no diplomatic breakthroughs or shifts in Israeli policy evident through September 2026, traders assess negligible prospects for formal relations by the end of 2026.