Israel and Saudi Arabia are in talks to forge official economic ties, The Times of London reported Saturday, quoting US and Arab sources.

According to the report in the British daily, Jerusalem and Riyadh are looking at developing relations in steps, possibly starting by allowing Israeli companies to set up shop in the Arab nation, or giving Israeli airline El Al permission to use Saudi airspace in its flights.

Officials close to Saudi Arabia denied the story, saying the report was no more than wishful thinking by the Trump administration.

There have been various media reports of clandestine talks between Israel and Arab powers, who have come to see the Jewish state as a possible ally against what they consider to be the greater threats of Iran and Islamist extremism. Saudi officials have had some open meetings with senior Israelis, and a Saudi general has visited Jerusalem and met with officials and politicians.

Israel has been keen to see a regional peace process that would see Arab states partially thawing their relations with the Jewish state, as a step towards peace with the Palestinians.

Prime Minister Benjamin Netanyahu has been promoting an “outside-in” approach that would see ties normalized between Israel and moderate Arab states as a way to promote peace.

The Palestinian leadership, meanwhile, has insisted on the formula laid down in the 2002 Saudi-led peace initiative, that sees a peace treaty between Israelis and Palestinians as a prerequisite for normalization with the entire Arab and Muslim world.

Prime Minister Benjamin Netanyahu, left, and US President Donald Trump, right, speak at Ben Gurion International Airport prior to the latter's departure from Israel on May 23, 2017. (Koby Gideon/GPO)

Prime Minister Benjamin Netanyahu, left, and US President Donald Trump, right, speak at Ben Gurion International Airport prior to the latter’s departure from Israel on May 23, 2017. (Koby Gideon/GPO)

US President Donald Trump has seemed to support a regional peace approach, saying he wanted to pursue “a much bigger deal” in the Middle East, which would include “many, many countries.”

A report earlier this year claimed that Netanyahu rejected a regional peace plan for the renewal of negotiations toward a two-state solution and recognition of Israel as a Jewish state a year ago.

The proposal was the result of months of negotiations led by then-US secretary of state John Kerry and culminated in a secret meeting on February 21, 2016, between Netanyahu, Kerry, Egyptian President Abdel-Fattah el-Sissi and Jordan’s King Abdullah.

Opposition leader Isaac Herzog reportedly joined a second secret meeting between Netanyahu and Sissi in Cairo in April of that year.

Herzog told Haaretz Monday that the meetings could have produced a deal that “changed the face of the Middle East,” but that the opportunity was ultimately torpedoed by hardliners in Netanyahu’s Likud party.