Netanyahu's statement came as a Hamas official said negotiations were expected to resume next week and portrayed the recall of the Israeli and American delegations as a pressure tactic.
Egypt and Qatar, which are mediating the talks alongside the United States, said the pause was only temporary and that talks would resume, though they did not say when.
The teams left Qatar on Thursday as President Donald Trump's special envoy, Steve Witkoff, said Hamas' latest response to proposals for a deal showed a "lack of desire" to reach a truce.
In a statement released by his office, Netanyahu echoed Witkoff, saying: "Hamas is the obstacle to a hostage release deal".
"Together with our US allies, we are now considering alternative options to bring our hostages home, end Hamas's terror rule, and secure lasting peace for Israel and our region," he said.
Israel's government didn't immediately respond to whether negotiations would resume next week.
Meanwhile, the leaders of Britain, France and Germany demanded Israel allow unrestricted aid into Gaza to end a "humanitarian catastrophe," after French President Emmanuel Macron announced that his country will become the first major Western power to recognise a Palestinian state.
The joint statement, issued after a call between Macron, British Prime Minister Keir Starmer and German Chancellor Friedrich Merz, called for an immediate ceasefire and said that "withholding essential humanitarian assistance to the civilian population is unacceptable," though it broke no new diplomatic ground.
The leaders said they "stand ready to take further action to support an immediate ceasefire and a political process that leads to lasting security and peace for Israelis, Palestinians and the entire region," but did not say what that action might be.
Macron's surprise announcement exposed differences among the European allies, known as the E3, over how to ease the worsening humanitarian crisis and end the Israel-Hamas war.
All three support a Palestinian state in principle, but Germany said it has no immediate plans to follow France's step, which Macron plans to formalise at the United Nations General Assembly in September.
Britain has not followed suit either, but Starmer is under mounting pressure to formally recognise Palestinian statehood, both from opposition MPs and from members of his own Labour Party government.
Health Secretary Wes Streeting on Tuesday called for an announcement "while there's still a state of Palestine left to recognise".
On Friday, 221 of the 650 MPs in the House of Commons signed a letter urging Starmer to recognise a Palestinian state.
"Since 1980 we have backed a two-state solution. Such a recognition would give that position substance," said the letter, signed by legislators from several government and opposition parties.
More than 140 countries recognise a Palestinian state, including a dozen in Europe.
But France is the first Group of Seven country and the largest European nation to take that step.
Israel and the United States both denounced France's decision.
The worsening humanitarian crisis in Gaza, where hunger is spreading and children have starved to death, has caused alarm even among Israel's closest allies.
Germany has traditionally been a particularly staunch ally of Israel in Europe, with relations rooted in the history of the Holocaust.
But Berlin, too, has sharpened its tone recently, describing the Israeli military's actions in Gaza as unacceptable and pushing for greater humanitarian aid.
The German government said in a statement on Friday that it is in a "constant exchange" with the Israeli government.
It said it is "prepared to increase the pressure" if there is no progress, but didn't elaborate on how.
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