In three frenetic days of diplomacy this week, President Barack Obama openly And the fallout for U.S.-Israel relations, and the future of the Middle East peace process, could be profound, said current and former U.S. officials.

Resolutions at the U.N. concerning the Israeli settlement issue had been circulating for around a year, according to U.S. and Arab diplomats. Obama administration officials said their plans on Mideast peace, however, were complicated by the U.S. presidential elections. The White House didn’t want to...