A powder keg atmosphere pervaded Jerusalem after an Israel Defense Forces soldier fatally shot a Palestinian teenager as he allegedly hurled a Molotov cocktail at cars in the West Bank in the latest violent incident that is stoking fears of a major Arab uprising.

Friday night's incident came after Arab youths and Israeli police clashed at the Temple Mount following afternoon prayers and two days after an Arab with a criminal record drove his car onto the crowded platform of the Jerusalem light railway system, crushing a three-month-old American baby girl to death and injuring seven more. That Wednesday incident was overshadowed by a terror attack the same day on the other side of the world, in Canada.

“The terror attacks that took place almost at the same time on opposite sides of the globe – Jerusalem and Ottawa – prove once again that terrorism is a worldwide plague that needs to be fought with force and without compromise," Israeli Foreign Minister Avigdor Liberman wrote on his Facebook page. "We will... continue to be determined in the fight against terror and terrorists,” Israeli Foreign Minister Avigdor Liberman wrote on his Facebook page.

Fears mounted Friday night that a third "intifada," or uprising, could arise in the West Bank following the death of the youth, Orwa Abed El Wahan Hammad Wahab, who Palestinians claim was 14, but Israelis suggest was 17. The U.S. State Department called for a "speedy and transparent investigation" and confirmed that the teenager was a Palestinian-American. 

Officials expressed "deepest condolences" to the teen's family.

Leaders from both Palestinian factions - Mahmoud Abbas’ West Bank-based Palestinian Authority, and the Gaza-based Hamas terror organization - had already done little to take the heat out of the escalating cycle of violence.

Earlier this week, in an interview with Vanity Fair, Hamas leader Khaled Meshaal, who has been accused of fomenting violence in the West Bank to court support of disenchanted Palestinian youth ahead of a potential showdown with the rival Abbas administration, ratcheted up the rhetoric. He praised the murders of three Jewish teenagers this summer by Hamas supporters, an incident that apparently prompted the revenge murder by Jewish settlers youths of an Arab teenager. The 50-day war in Gaza that followed has also inflamed feelings in disputed parts of Jerusalem and the West Bank.

“As the Israeli investigations have shown, it turned out that a Hamas field group in the West Bank had killed those three settlers," Meshaal said. "So, this was indeed an operation executed by a Hamas group... This was a legitimate operation.”

Israeli Foreign Office spokesman Paul Hirschson said the way the two governments handled the murders was revealing.

“Take the murder of the Arab youth, Mohammed Abu Khdeir, during the summer. It was horrific,” Hirschson told FoxNews.com. “Israel, within less than 72 hours, tracked down the perpetrators and arrested them. They will soon be tried, and, if found guilty, will likely spend a significant amount of time in jail. The leadership of Israel instructed the police to track them down and that’s what they did. That’s the way responsible leadership behaves.”

Hirschson said Palestinian Authority leader Mahmoud Abbas played a major role in fanning the flames that ow threaten to engulf the West Bank and parts of Jerusalem.

“When President Abbas goes to the UN and accuses Israel of genocide - which is patently untrue - and goes on and on in the days and weeks since then, it’s unquestionably laying the groundwork for a fertile atmosphere for somebody to go and do that [railway attack]. The PA leadership is creating an atmosphere and environment which encourages this.”

Both sides appear to be presenting ever more entrenched positions. Violence is flaring on an almost daily basis, and the two-state solution that for so long was acceptable to an overwhelming majority of Israelis is now, according to recent polls, supported by less than half of voters who appear to fear that any potential Palestinian partner for peace has all but slipped away.

And in a move reported late Friday that appears to come in response to this week’s events, controversial Israeli right-winger and housing minister Uri Ariel is apparently mulling moving to live in the Silwan district in East Jerusalem, home to Wednesday’s terrorist attacker, a decision likely to be perceived by many Palestinians as highly inflammatory.

“There is concern among defense and security officials,” reported the Jerusalem Post, “who are fearful that Ariel’s plan could further exacerbate tensions in the capital.”

Paul Alster is an Israel-based journalist. Follow him on Twitter @paul_alster and visit his website: www.paulalster.com.