Israel’s 25th Knesset completed its full term and dispersed in July 2026 after passing a dissolution bill, setting legislative elections for October 27. Polls show both the Netanyahu-led right-religious bloc and the main opposition camp falling short of the 61 seats needed for a clear majority, with Arab parties holding pivotal leverage yet facing reluctance from larger factions to join coalitions. This fragmentation, combined with longstanding disputes over conscription, budgets, and judicial issues, has produced extended post-election negotiations in past cycles. A new government requires presidential assignment of a formateur followed by a Knesset vote of confidence, a process that can stretch weeks or months. The narrow 53.5% implied probability for passage by December 31 reflects trader assessment of these timelines and the risk that deadlock could delay or prevent confirmation before year-end.