A year ago, Saudi Arabia was preparing to recognize Israel in a deal that would have fundamentally reshaped the Mideast and further isolate Iran and its allies while barely lifting a finger to advance Palestinian statehood.

That deal is further away than ever, even after the killing of Hamas leader Yahya Sinwar, which has been widely seized upon as a potential opening for a peace deal. Instead, Saudi Arabia is warming relations with its traditional archenemy, Iran, while insisting that any diplomatic pact now hinges on Israel’s acceptance of a Palestinian state, a remarkable Saudi turnaround.

A diplomatic detente is underway in the Middle East, but not the one envisioned by Israeli Prime Minister Benjamin Netanyahu, who continues to say that his administration can clinch a deal with Saudi Arabia. This month, the foreign ministers of the Persian Gulf states met for the first time as a group with their Iranian counterpart. It is a shaky, early stage rapprochement that will only chip away at centuries of sectarian antagonisms, but it represents a sharp shift in a region where the rivalry between Saudi Arabia and Iran has drenched the region in bloodshed for decades.

Iran’s outreach continued after that, with the country’s foreign minister, Abbas Araghchi, visiting Saudi Arabia before heading to other countries in the region, including Iraq and Oman, in an effort to ease tensions. He also visited Jordan before traveling to Egypt and Turkey. The visit to Egypt was the first by an Iranian foreign minister in 12 years, according to Iranian news media.

“In the region, we now have a common grievance about the threat of the war spreading, and the wars in Gaza and Lebanon and the displaced people,” Araghchi said Friday.

While Netanyahu continues to reject the creation of a Palestinian state, Saudi officials have taken to newspapers and public speeches to put a two-state solution on the negotiating table. That, the kingdom has said, is the only way at this point for Israel to win favor with Saudi Arabia, largely seen as the leader of the Arab world.

What changed? Images started streaming out of the Gaza Strip of children buried alive under rubble, mothers grieving over their dead babies and Palestinians starving because Israel had blocked aid from entering the territory — all of which made it impossible for Saudi leaders to ignore the issue of Palestinian statehood.

“What Gaza has done is set back any Israeli integration into the region,” said Ali Shihabi, a Saudi businessman close to the monarchy who’s on the advisory board of Neom, a futuristic city that is the pet project of Crown Prince Mohammed bin Salman, the future ruler. “Saudi Arabia sees that any association with Israel has become more toxic since Gaza, unless the Israelis change their spots and show a real commitment to a Palestinian state, which they have refused to do.”

For now, Saudi Arabia and its Gulf partners remain skeptical about the sincerity of Iran’s diplomatic overtures. While two of Iran’s proxies, Hamas and Hezbollah, have been hammered by Israel, Iran still arms and supports its third ally, the Houthis in Yemen, which have attacked Saudi Arabia.

But “as long as the Iranians are reaching a hand out to Riyadh, the Saudi leadership will take it,” Shihabi said, and if Iran is serious, “that would be a true realignment of the Mideast.”

Saudi Arabia and Iran have long jockeyed for regional dominance, a rivalry shaped by competing branches of Islam.

The war in Gaza has been raging since Hamas launched a bloody attack on Oct. 7, 2023, killing about 1,200 Israelis and kidnapping over 200. That prompted Israel to launch an invasion of Gaza that has been criticized for its indiscriminate bombing and catastrophic death toll: over 40,000 dead, many of them civilians.

And while palace insiders like Shihabi admit that Saudi Arabia is no democracy, Crown Prince Mohammed is sensitive to public opinion, which has hardened toward Israel over the past year.

In the months before Oct. 7, 2023, Saudi Arabia was planning an agreement with Israel that would have given Riyadh an expanded defense pact with the United States and support for a civilian nuclear program in exchange for normalizing ties. While some other Gulf countries opened diplomatic relations with Israel in 2020 in a deal known as the Abraham Accords, they did not use their leverage to push Israel to create and recognize a Palestinian state.

“The Abraham Accords were cosmetic,” Shihabi said. “There was nothing substantive about them when it comes to a real, enduring regional peace agreement. Many of the states that signed on did so because they see Israel as a path to influence in Washington.”