"Obviously in the aftermath of Gaza and some of the challenges in Jerusalem, the environment has not been conducive for the sort of peace initiatives that we'd like to see," Obama said.
"We are going to continue to share ideas, recognizing that ultimately what's going to be good for the Israelis and the Palestinians is their capacity to live together side by side in peace and security and for Palestinians to have their own state."
Meanwhile, Jordan announced Friday its intention to add 75 new guards to the Al-Aqsa Mosque, according to a report by Palestinian news agency Ma'an.
The director of the mosque, Sheikh Omar al-Kiswani told Ma'an that the new security personnel would be posted in the near future.
After the White House meeting with Abdullah, Obama stressed he would keep trying in the coming months to reach a nuclear deal with Iran and said Washington would increase aid to $1 billion annually to Middle East ally Jordan.
"I briefed His Majesty about our negotiations with Iran, and indicated to him that we would prefer no deal to a bad deal, but that we continue to hold out the possibility that we can eliminate the risk of Iran obtaining a nuclear weapon," Obama told reporters.
"Whether Iran seizes this opportunity or not is something we have not yet been able to determine, but we will keep on trying over the next several months and will keep Jordan apprised."
Washington sees Jordan as a critical ally in the region, and Obama praised the country for hosting refugees displaced by the war in Syria.
He said the United States would provide an additional loan guarantee and more aid to Jordan "to reinforce the sort of political and economic reforms that have taken place inside of Jordan."
Washington and its allies were making slow but steady progress against the militant group known as Islamic State, Obama said.
Yitzhak Benhorin, Roi Kais, and Reuters contributed to this report.