Meanwhile, as reported previously, the rapidly escalating war has also pushed the kingdom to engage with Israel's sworn enemy, Iran: earlier this week, Saudi Crown Prince Mohammed bin Salman took his first phone call from Iranian President Ebrahim Raisi as Riyadh tries to prevent a broader surge in violence across the region.

Two sources told Reuters there would be a delay in the US-backed talks on normalization with Israel that was a key step for the kingdom to secure what Riyadh considers the real prize of a U.S. defense pact in exchange, although it may just as well settle for a higher oil price now that geopolitical risk premium has exploded higher.

As a reminder, until Hamas sparked a war on Oct. 7 by launching an attack on Israel, whether with or without Iran backing, both Israeli and Saudi leaders had been saying they were moving steadily towards a deal that could have reshaped the Middle East.

While Saudi Arabia - birthplace of Islam and home to its two holiest sites - had until the latest conflict indicated it would not allow its pursuit of a U.S. defense pact be derailed even if Israel did not offer significant concessions to the Palestinians in the their bid for statehood, sources had previously said. But an approach that sidelined Palestinians would risk angering Arabs around the region, as Arab news outlets broadcast images of Palestinians killed in Israeli retaliatory airstrikes.

Hamas fighters killed more than 1,300 Israelis in their Oct. 7 attack and more than 1,500 had been killed by Friday in Israel's ongoing strikes on Gaza in response, according to official reports.

The first Reuters source said talks could not be continued for now and the issue of Israeli concessions for the Palestinians would need to be a bigger priority when discussions resumed - a comment that indicates Riyadh has not abandoned the idea, although the probability of Palestine getting bigger concessions now from the Biden admin is negligible.