Bahrain's agreement to normalize ties with Israel marks a "new era of peace", Israeli Prime Minister Benjamin Netanyahu said on Friday after US President Donald Trump announced the new deal.

"For many long years, we invested in peace, and now peace will invest in us, will bring about truly major investments in Israel's economy, and that is very important," Netanyahu said in a video statement.

"It took us 26 years to sign a third peace agreement with an Arab country and 29 days for a fourth agreement. This is a new era of peace. Peace for peace. Economy for economy," he added.

U.S. President Donald Trump will hold a Sept. 15 signing ceremony for the normalization agreement between Israel and the United Arab Emirates which was announced on 13 August.