34-nations have already agreed.
But it will be seen as a threat to archenemy Iran – and a possible rival to NATO, which includes the UK and US.
Pakistani media is reporting Saudi Arabia has asked its nuclear-armed Muslim ally to lead the initiative and chalk out a framework for the grouping.
The newly-assertive monarchy – which already has the highest military spending in the world – has already established a 34-nation force to fight ISIS.
Pakistan’s Chief of Army Staff General Raheel Shareef was reportedly asked to command the alliance.
All members are Sunni Muslim countries and security experts have interpreted the alliance as a counterweight to Shia Muslim Iran – which has been their sworn enemy for almost 1,400 years.
It is unclear if the new NATO-like force – which could have a shared army or command structure – will have the same Sunni membership.
The shock development comes as Saudi Arabia blasted long-time ally America for calling the Muslim oil giant a “free rider”.
US president Barak Obama slammed Saudi Arabia as a “free rider” on US foreign policy and attacked Riyadh’s funding of religious intolerance last week.
Prince Turki al-Faisal – a former Saudi intelligence chief and ex-ambassador to Washington and London – hit back, saying: “No, Mr Obama – we are not ‘free riders’.”