Yes absolutely, it's a key factor in 10s of thousands of dead Palestinians, and there increasingly fanatical racism is a major reason why so many Arab states will struggle to sell normalisation to their people. Whilst at the same time allowing the likes or Iran to navigate the shia/sunni divide and still garner some support in the wider arab world if they are seen to lead some kind of resistance to the settler movement.
Why is Israeli extremism towards Zionism and what constitutes their land that is limited in essence to an already established nation state and occupied territories in the West Bank and Gaza more destabilizing than say,
Salafi extremism which has resulted in ISIS and hundreds of thousands of dead and their ambition to rule over the entire middle east under a caliphate
OR
Iranian foreign policy which is to arm and equip all kinds of paramilitary groups in failed states in the middle east for their own ends of sowing discord amongst the Arab World, particularly those in alignment with the West
OR
Al-Qaeda and their various physical manifestations that have tens of thousands of soldiers such as the Al-Nusra front and Al-Din marauding through Syria.
All these groups whose end goals are murky are far more dangerous for stability than Israeli Zionism. The goals of Zionism are finite, known and pretty static for the past decades. The goals of the above in some cases are quite literally kill everyone but ourselves, destroy everyone but ourselves and last man standing is the winner.
There's a reason why Saudi Arabia, Jordan, Egypt, Turkey and the Gulf States have either normalized relations or have not yet officially done so but are in a state of peace and co-existence. The only potential conflicts in the region that extremist Zionism can poise to start are paramilitary groups like Hezbollah and Houthi's, failed states in Syria and a geo-political foe in Iran.
Israel's relationship with the Arab world is far more stable than Iran's for example.