The former Real Madrid captain and Ballon d'Or winner has been left unimpressed by the club's new contract offer.
"It’s true that I have offers from Europe. I need to analys everything, choose calmly, and see where I feel best,” Benzema said before Christmas.
L'Equipe says Al Ittihad has offered Benzema a contract extension, but under the same conditions, something the striker considers "insulting".
Benzema is taking his stand given his strong performance this season: 16 goals in 21 league and cup matches.
If the Saudis maintain their position, Benzema's days at the club could be over at the end of the season.
However, Al Ittihad 's sporting director, Ramon Planes , is optimistic about him staying: "He's motivated to stay, he's seen that it's a serious project with good players, and he wants to play for several more years."