U.S. officials had hoped to build on the momentum of the so-called Abraham Accords, which formalized ties between Israel and two other Gulf Arab states, Bahrain and the United Arab Emirates, and remove the biggest remaining barrier to Israel’s diplomatic integration into the region—a central part of President Trump’s effort to contain Tehran.

But Prince Mohammed pulled back from a deal, according to the Saudi advisors and U.S. officials, largely because of the U.S. election result. Saudi aides said the prince, eager to build ties with the incoming administration of President-elect Joe Biden, was reluctant to take the step now, when he could use a deal later to help cement relations with the new American leader.

Mr. Biden has said he also favors normalization deals between Arab states and Israel. He has taken a tougher stance on Saudi Arabia’s human-rights record, in particular the killing of dissident journalist Jamal Khashoggi. And a deal struck under the aegis of the new president could put relations between the Biden administration and Riyadh on a surer footing, Saudi aides said.