U.S. President Barack Obama speaks to the media as he welcomes Palestinian President Mahmoud Abbas (not shown) to the White House in Washington on Wednesday. Obama hosted Abbas seeking to ensure that fallout from Israel's Gaza flotilla raid does not derail fragile, U.S.-led peace efforts. (Larry Downing/Reuters)

U.S. President Barack Obama called the increasingly tense conditions in the Mideast "unsustainable" Wednesday and said a better approach is needed in blockaded Gaza.

Turning his attention to the troubled region as he hosted Palestinian leader Mahmoud Abbas for talks, Obama also predicted "real progress" in coming months in U.S. efforts to nudge the Israelis and Palestinians toward direct peace talks, if both sides commit. Obama said both sides want a peaceful solution.

"Both sides have to create an environment, a climate that will be conducive to an actual breakthrough," the president said after meeting in the Oval Office with Abbas.

Obama reiterated that this means the Israelis must curb settlement construction in disputed territories and that the Palestinians must make progress on security, among other issues.

Obama said the U.S. is fully committed to seeing the effort through.

"We will continue to work side by side with you as well as the Israelis," Obama said to Abbas.

The meeting came little more than a week after Israel's deadly May 31 raid on a flotilla hoping to break the blockade. Nine men in the flotilla were killed, including eight Turks and a Turkish-American.

Israel says its soldiers opened fire only after they were set upon by a mob of pro-Palestinian activists. The activists and their supporters blame Israel, saying its commandos began shooting unnecessarily.

Obama said the incident was a "tragedy" and that a "better approach" is needed in Gaza. He called for a "new conceptual framework" for Israel's three-year-old blockade.

"It's important that we get all the facts," he said. "What we also know is that the situation in Gaza is unsustainable."

Abbas urged that the "Israeli siege of the Palestinian people" be lifted.

"What we care about is living in coexistence with Israel," the Palestinian leader said.