In a meeting with Palestinian President Mahmoud Abbas and Israeli Prime Minister, Obama said that talks “must begin and begin soon.”
The meeting was meant to bring together Israeli and Palestinian leaders for the first time since Israel’s election in order to jumpstart the peace process that was interrupted by last December’s war in Gaza.
Since then the US president has appointed George Mitchell as his special envoy to reopen the dialogue on unresolved issues—land, borders, East Jerusalem, Palestinian refugees—but neither side appears to be willing to move.
Israeli government secretary Zvi Herzog said the talks were "a step in the right direction", but that conditions were "not ripe for a formal re-launch of negotiations".
Last week, a senior Palestinian official suggested his side was taking part so as not to disappoint the US and that doing so did not mean a resumption of peace talks.
Disagreements over settlements in the West Bank and East Jerusalem have blocked all attempts to restart the peace talks so far.
US and Palestinian negotiators have said Israel must fully halt work on settlements construction, something Israel has refused to do.
Mr Netanyahu had initially offered a temporary freeze for several months, but not in East Jerusalem, arguing that "natural growth" of settler families must be accommodated.
Both Netanyahu and Abbas faced domestic challenges. His Likud party and its ally, Yisrael Beiteinu, back West Bank settlements, and refuse any territorial compromise that could lead to a Palestinian state.
Abbas instead needs the talks to yield concrete results to counter the influence Hamas, which remains on bent on armed struggle against Israel.
The three leaders are in New York for the opening of the General Assembly of the United Nations.
Obama said that Mitchell would meet negotiators from both sides next week.
“We have substantially and significantly progressed in reducing the number of issues on which there is disagreement,” Mitchell said as he commented the New York meeting.
By contrast, neither Netanyahu nor Abbas released any official statement about the meeting.