Ongoing conflict in Gaza and Saudi demands for Palestinian statehood remain the dominant barriers to normalization, with Riyadh conditioning any deal on a ceasefire, reconstruction, and a clear path to Palestinian sovereignty. Recent analyses from early 2026 indicate Saudi officials view Israeli policies as destabilizing, reducing shared security incentives once heightened by Iranian threats. Strengthened U.S.-Saudi ties under the current administration have further diminished Riyadh's urgency to link normalization to American security or nuclear cooperation. Israeli domestic politics, including coalition resistance to territorial concessions, align with limited prospects before the 2027 deadline. Trader pricing reflects these entrenched political constraints rather than near-term diplomatic momentum.