Saudi Arabia continues to condition formal normalization with Israel on credible progress toward Palestinian statehood, a demand consistently rejected by Prime Minister Benjamin Netanyahu’s government. This core impasse, reinforced since the October 2023 Hamas attacks and ensuing Gaza conflict, has kept talks stalled despite shared security concerns over Iran and Houthi threats. Recent Houthi strikes on Saudi infrastructure have prompted limited backchannel discussions of intelligence cooperation via U.S. channels, yet Israeli officials report no Saudi appetite for diplomatic relations before 2027. Traders assign a 93.8% probability to “No” based on these entrenched positions, Netanyahu’s domestic constraints, and Saudi public opinion polls showing strong opposition. A shift would require either Israeli elections producing a government open to Palestinian concessions or an unexpected regional breakthrough altering Riyadh’s calculations.