Right now things are far from clear, PSOE is the key. It is very difficult to assess what is real and what political theater.
The only option for PP, is a minority government with the abstention of PSOE and Ciudadanos... but by the time PSOE does not want to give up. If they reach an agreement on certain issues of State ... would be the least bad option.
But Pedro Sanchez wants to run for President of the Government and prove he is the leader of PSOE. He has problems within his own party, because the interests of regional groups are different. Some want to negotiate with Podemos (because in their regions support them), but others believe that Podemos is the main enemy of PSOE. Also in PSOE there is a strong sector that puts the red line in maintaining the unity of Spain.
PSOE wants to sell a left pact as the Portuguese ... but the reality is different in Spain. In Portugal all political groups defend the nation, in Spain PSOE would need the support of people who want to break the nation.
He may try to extend the process to get to be nominated as a candidate for the presidency, strength his leadership and buy time for other elections. But that would leave the country without a government six months and that could also have an electoral price.
Podemos has joined in some regions (Galicia, Valencia and Cataluña), with leftist movements and independence groups ... and further supports the referendum in Cataluña. Podemos, is Podemos plus dozens of small groups and parties with different interests. They all agree on something on independence issues, it is very difficult.
Ciudadanos marks the red line in the unity of Spain, and will never support the PSOE if it yields on that topic.
Then there are small groups of right and left parties, ranging from moderate nationalists to radical independentists.
The unity of Spain is key in many negotiations ... and while the PP and Ciudadanos are clear in defending the unity and do in all regions of Spain ... PSOE and Podemos pose different things depending on the region if it makes them win more votes.
In Cataluña, the independentists have majority , but they are no able to reach a government agreement... if tomorrow they do not reach an agreement, there will be new elections. It has been four months an absolute circus.
The electoral calculations, the political clashes, personal egos ... everything influences... and some instead of wanting to reach agreements for a stable government, seem more concerned with winning the biggest possible points ahead of new elections. If finally there are new elections, probably there will be a confrontation PSOE / Podemos to see who is more guilty.