Netanyahu's decision to reject a US invitation to travel to the White House later this month sparked a sharp response from Washington, with US officials saying they were "surprised" to learn of the development through Israeli media, rather than from Netanyahu's office.
Officials in Washington also shot down "false" media suggestions that Netanyahu decided not to make the trip the US because President Obama could not organize a meeting between himself and the Israeli PM.
"We were looking forward to hosting the bilateral meeting," Ned Price, a spokesman for the White House's National Security Council said.
"We were surprised to first learn via media reports that the prime minister, rather than accept our invitation, opted to cancel his visit."
Israeli officials said Netanyahu declined the invitation to travel to Washington because he did not want to disrupt the caucus vote for the upcoming US Presidential election at the end of the year.
Tension Simmers
The incident is not the first sign of tension between Obama and Netanyahu and comes amid continued disagreement over US defence aid to Israel.
While the US has offered to increase military aid to Israel to US$5 billion over the next decade, it is understood that Israeli officials were seeking somewhere between US$10 billion and US$15 billion to bolster the country's defences.
The developments also come as anger lingers in Israel over the US' role in negotiating the Iran nuclear deal, which Netanyahu strongly condemned.
In an unprecedented move that went against traditional diplomatic customs, the prime minister last year traveled to Washington to warn the US Congress against voting in favor of the nuclear deal.
To make matters even more awkward, US Vice President Joe Biden is in Israel on Tuesday meeting with both Netanyahu and Palestinian president Mahmoud Abbas to voice concerns over the five-month long run of violence that has claimed the lives of 181 Palestinians and 28 Israelis.
Israeli officials say they are merely protecting their own citizens as a result of the wave of the Palestinian attacks, while others have raised concerns about Israel's heavy-handed reprisals, pointing out the discrepancy in the number of Palestinians and Israelis killed as a result of the violence.
