Israel announced on Wednesday it would close its embassy in Paraguay and recall its ambassador after the South American country said it would move its embassy from the official Israeli capital of Jerusalem to the nearby city of Tel Aviv.
In May, Paraguay moved its embassy to Jerusalem, following the United States and Guatemala.
Palestinian media reported that new Paraguayan President Mario Abdo Benitez decided to reverse the move after receiving pressure from the Palestinian Foreign Ministry.
"Paraguay wants to contribute to an intensification of regional diplomatic efforts to achieve a broad, fair and lasting peace in the Middle East," Paraguayan Foreign Minister Luis Alberto Castiglioni said during the official announcement.
Countries have long kept their embassies in Tel Aviv. Both the Israelis and the Palestinians claim Jerusalem as their capital, so operating out of another city allows countries to avoid taking sides.
President Donald Trump broke with tradition last December when the U.S. became the first country to relocate its embassy from Tel Aviv and recognize Jerusalem as Israel's capital.