Benjamin Netanyahu waves to his supporters as he arrives with Former Israel Minister for Foreign Affairs Avigdor Liberman at his election campaign headquarters on Tuesday.

Israel's national elections Tuesday left the Obama administration and its allies with a new prospect: a weakened Prime Minister Benjamin Netanyahu, whose years of testiness and occasional confrontation with President Barack Obama failed to prevent the rise of a new centrist party.

Israel's election — and the emergence as the country's second-largest party of Yesh Atid, led by former television personality Yair Lapid — were driven largely by domestic economic and social issues. But it surprised many who had anticipated the victory of a militant right-wing bloc. And Washington was scrambling Tuesday to process what appears to be a new, more centrist coalition in a year that could test American-Israeli relations over a brewing conflict with Iran and an American desire to move toward Palestinian statehood.

According to the Israel's Channel 2, with 95% of votes counted, Likud-Beiteinu had won 31 seats, while Lapid's party won 19, and Labor won 17.

"The net impact is that a broader coalition may provide more openings as part of a renewal of peace negotiations with the Palestinians," said David Makovsky, the director of the Project on the Middle East Peace Process at the Washington Institute for Near East Policy, though he also predicted protracted bargaining in the "Rubik's cube" of Israeli coalition politics.

"Another incentive for a wider coalition is the biggest issue in play between Washington and Israel this year is Iran," Makovsky said. "Accordingly, Israel will need to prioritize relations with the Obama administration towards reaching a successful resolution."

That fact, and Lapid's demand that negotiations be restarted with Palestinian leaders, have offered backers of the peace process a rare reason for optimism.

"I think Netanyahu forming a coalition with partners who demand peace negotiations with Palestinians, that's good for Obama," said Peace Now spokesman Ori Nir.

And while Obama may have been burned once too often by the difficult politics of Israel and Palestinian, the eternally optimistic peace processers are hoping for a new champion: his incoming Secretary of State, Senator John Kerry.

"There's a lot of buzz going around that Kerry wants to own this issue," said Zvika Krieger, a vice president at the S. Daniel Abraham Center for Middle East Peace and contributing editor to The Atlantic. "If Kerry does in fact request that, we might see some movement on this issue."

Another Democratic Mideast analyst said Netanyahu would be pulled in both directions by his new coalition. A centrist coalition may make "it easier to get some things done, which could please the White House, but he will also face real pressure from the right and within his own base, which will also give him a pressure release valve," the analyst said.

Others shrugged off the heated rhetoric surrounding the elections' impact both here and in Israel.

Writing in Bloomberg View, Jeffrey Goldberg argued that the effect of the election results on the peace process would be " not as much as you'd expect."

"In the past week, especially, Netanyahu has been running against President Barack Obama," Goldberg wrote. "Netanyahu had been trying to convey to the settlers and their supporters that he is the only one strong enough to resist another U.S. pressure campaign to freeze Israeli settlement-building."

"The next coalition — even if it is center-right, rather than hard-right — is going to have a hard time selling a revitalized peace process," Goldberg wrote.

Meanwhile, Netanyahu appeared to signal a preference for a centrist coalition, telling supporters Tuesday night that his government will be "as broad as possible."