The frosty relationship between President Obama and Israeli Prime Minister Benjamin Netanyahu will endure another test Friday, as the two meet in the Oval Office following a bombshell policy shift by the U.S. on terms for Mideast peace.

Obama, in a sweeping address tackling the uprisings in the Middle East and the stalled peace process, stunned Washington and Jerusalem Thursday by endorsing Palestinians' demand for their own state based on the pre-1967 borders. The break with U.S. policy appeared to immediately aggravate the Israelis, who want the borders of any future Palestinian state determined through negotiations.

In a statement released late Thursday, Netanyahu said such a withdrawal would put at risk Israel's security. He effectively called on Obama to recant his latest demand...