Palestinian leader Mahmoud Abbas said on Thursday there could be no peace in the Middle East without a two-state solution, sending a warning as Saudi Arabia considers recognising Israel.

"Those who think that peace can prevail in the Middle East without the Palestinian people enjoying their full, legitimate national rights would be mistaken," Abbas told the UN General Assembly.

The veteran 87-year-old leader made a new appeal to UN Secretary-General Antonio Guterres to call an international conference on creating a Palestinian state.

The United States, historically the peace broker between the two sides, has all but given up on serious negotiations with Israeli Prime Minister Benjamin Netanyahu's hard-right government, which has pushed forward controversial settlements in the occupied West Bank.

A UN conference "may be the last opportunity to salvage the two-state solution and to prevent the situation from deteriorating more seriously and threatening the security and stability of our region and the entire world," Abbas said.

His address came a day after Netanyahu discussed Saudi normalisation in a meeting with US President Joe Biden and as Saudi Arabia's de facto ruler, Crown Prince Mohammed bin Salman, said that the process was getting "closer."

Israel and the United States believe that Israeli relations with Saudi Arabia – guardian of Islam's two holiest sites – would be a game-changer for the Middle East. (AFP)