Shlaim, a dual British-Israeli national who had to use his British passport to enter the kingdom, which does not recognise Israel, was invited by former intelligence chief Prince Turki al-Faisal, a brother of Foreign Minister Prince Saud al-Faisal.
He has been meeting Saudi and foreign diplomats, scholars and businessmen, and spoke on Israeli-Arab relations at the King Faisal Centre for Research and Islamic Studies.
Israeli Prime Minister Benjamin Netanyahu's "intransigence" was to blame for the failure to date of US-sponsored talks between the Palestinians and Israel, he said, voicing surprise Washington was not publicly blaming the Jewish state.
US President Barack Obama had gone "head-to-head" with Netanyahu three times over the crucial issue of Jewish settlements, said Shlaim. "Three times Obama lost" and was now "losing credibility in the Arab world."
Shlaim is one of a group of Israeli "new historians" who have challenged the classic David vs Goliath portrayal of Israel's founding -- the others include Benny Morris and Ilan Pappe.
Born in Baghdad in 1945, his family moved to Israel while he was still young. He grew up in Israel and did service in the Israeli military.
He went on to study history at Cambridge, becoming an expert on Israel's establishment and its conflicts. His books include portraits of Jordan's King Abdullah I and King Hussein, and "The Iron Wall: Israel and the Arab World."
Israel "bears a larger share of the responsibility for the political deadlock" with the Palestinians and its Arab neighbours since its establishment in 1948, he wrote in that book.
His visit as a Jew to Saudi Arabia, which practices an ultra-conservative version of Islam, was not an issue. "Saudis do not have problems with Jews, but with Israelis," he said.
Shlaim praised Saudi King Abdullah's Arab Peace Initiative, first advanced in 2002, offering Arab recognition of Israel in exchange for a Palestinian state based on pre-1967 borders, with its capital in east Jerusalem.
The initiative is "the best plan imaginable," he said. It "offers Israel what it always said it wanted."
Shlaim, however, also blamed the Saudis for merely laying the plan on the table. "My one criticism of the Saudis is that there was no follow-up," said the Oxford professor.
He said the root of the peace talks' failure was Israel's ability to keep the focus of Washington and others on Iran as the primary threat rather than the Palestinian-Israeli conflict, which was "the most fundamental in the region."
The WikiLeaks revelations of US diplomatic cables which showed up the fears of Arab states in the Gulf over Iran's nuclear ambitions had strengthened Netanyahu's hand, said Shlaim.
The lack of progress in peace efforts was pushing educated young Arabs away from the process, he added.
"Until recently all the Arabs agreed with me. But since the (2006) Lebanon war (between Hezbollah and Israel) all the opinion has hardened. Most of my Arab students now say Israel was never legitimate. I'm losing the argument."