Riyadh says Israel must commit to Arab peace proposals before relations can improve.
The initiative calls for the creation of a viable Palestinian state in Gaza and the West Bank, with East Jerusalem as its capital.
It also seeks a “just solution” to the long-term future of Palestinian refugees under the terms of UN General Assembly resolution 194.
The Israeli government has repeatedly rejected calls for Palestinians who fled or were forced out of their homes during the 1948 Arab-Israeli war to return to areas in what is now Israel.
About 4.6 million Palestinian refugees are living outside their ancestral lands in Syria, Jordan, Lebanon, Gaza and the Israeli-occupied West Bank.