A cash boost of hundreds of millions of dollars and more control of land in the occupied West Bank are among Palestinian demands in the event of a three-way deal involving the US, Saudi Arabia and Israel, the BBC has learned.
Officials from the Palestinian Authority (PA) held talks in Riyadh with Saudi counterparts.
They were also due to see US officials.
The Americans are long thought to have been pushing for a landmark pact to normalise Israel-Saudi ties.
It would be underwritten by Washington and would include a major security deal the Saudis want to achieve with the US. But the prospects for such agreements face significant obstacles and remain distant.
"We don't expect any imminent announcements or breakthroughs in the period ahead," said White House National Security Adviser Jake Sullivan on Tuesday.
However, given the scope for a historic realignment of ties in the Middle East, there is continuing speculation over the framework for any deal, with American shuttle diplomacy picking up again after trips by officials to Riyadh, Amman and Jerusalem this summer.
US President Joe Biden is likely to see a Saudi-Israel deal as a breakthrough foreign policy prize he can present to voters ahead of next year's election.
Saudi Arabia is a leader of the Arab and Islamic world. It has never formally recognised Israel since the creation of the state in 1948.
Israeli Prime Minister Benjamin Netanyahu talked up the possibility last month, claiming: "We're about to witness a pivot of history."
Any deal, though, would be deeply controversial.
In return for recognising Israel, Saudi Arabia is said to be demanding US guarantees for advanced American-made weapons and, most contentious of all, a civil nuclear programme including in-country uranium enrichment.
Israel for its part would benefit from trade and defence ties with the Gulf superpower and further historic integration it has always sought in the region, following on from other Arab state normalisation deals brokered in 2020.
"These are mostly security and trade agreements. Fast forward to the year 2023, and we now see that Saudi Arabia also wants to get involved in this," said Diana Buttu, a former legal adviser to the official Palestinian negotiating team in the now-moribund peace talks with the Israelis.
For a deal to succeed it would have to be seen to involve significant Israeli concessions to the Palestinians.
Saudi Crown Prince Mohammed bin Salman, the kingdom's de facto ruler, needs to assuage his own public - historically opposed to Israel and deeply sympathetic to the Palestinian cause.
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