I don't think the Saudi's are conditioning the deal on the return to 1967 border. They know that's highly unrealistic.It is just that this "fact" has been basically presented by the delusional and malicious Western media, we don't know what is the real nature of those "negotiations". Maybe the US just spam texts them or something, who knows lol?
But we know from explicit statements that Saudis would, in the real world, agree only on 1967 borders, as a two-state solution, to agree to the normalization with Israel, which is basically a lose-lose nightmare scenario, for the US and Israel.
So if the US continues to negotiate with Saudis, despite that, then it shows you who has the "weaker hand" there. Paying Saudis additionally in military matters + cutting Israel in half as requirements. Those are a kind of demands your enemy would make on you, not "vassals" lol, haha.
MBS is also less attached to Palestinian cause than his father. He cut financial aid to the Palestinian authority, censored online criticism of Israel, etc.. And it's an open secret that there is already extensive security and intelligence cooperation between Israel and Saudi Arbia.
I think the Saudi's desperately want this deal as much as the Americans and Israelis. The world is transitioning away from Oil (and therefore Saudi's relevance). They prob will sacrifice some of their Palestinian demands in order to get a NATO style guarantees from US.