'Biggest barrier' to Saudi-Israeli normalization is the two-state solution, says ex-CIA director

• Saudi Arabia's official position is that it will not open diplomatic relations with Israel unless an independent Palestinian state is recognized.
• While the two-state solution would bring about a "significant effect" in the region, Petraeus said it's not "all that realistic" right now.

A two-state solution to the Israel-Palestinian conflict is "elusive" right now, according to former CIA director David Petraeus, adding that it is also the "single biggest barrier" to normalizing relations between Israel and Saudi Arabia.

"A solid path, a solid commitment to a two-state solution from Israel" is the biggest hurdle to Israel and Saudi's normalization plans, Petraeus, who is now chairman at KKR Global Institute, told CNBC's Dan Murphy.

Saudi Arabia does not recognize Israel as a state and has refused to do so since the Jewish nation's independence in 1948. However, there have been discrete but growing cooperation between them in recent years, raising hopes for a normalization agreement.

Achieving a diplomatic deal between two of America's most important allies in the Middle East was one of U.S. President Joe Biden's top foreign policy priorities.

But Oct. 7 changed everything. Palestinian militant group Hamas infiltrated Israel, killing more than 1,200 people and kidnapping dozens more.

In response, Israel waged a massive military offensive on the Gaza Strip which Hamas has controlled since 2007. More than 35,000 people have been killed in the Palestinian enclave so far, according to the health ministry there which is run by Hamas.

Saudi Arabia's official position is that it will not open diplomatic relations with Israel unless an independent Palestinian state is recognized.

"The Kingdom has communicated its firm position to