The kingdom announced a purge of senior officials following the announcement, including Saud al-Qahtani, an adviser to Crown Prince Mohammed bin Salman, and General Ahmed al-Asiri, a senior intelligence officials.
The Saudi king also ordered the setting up of ministerial committee under the chairmanship of the crown prince, widely known as MBS, to restructure the kingdom's intelligence agency and "define its powers accurately".
Mr Trump said it was possible that Prince Mohammed had been unaware of the circumstances around the death of Khashoggi, a Saudi national and US resident.
But Trump again emphasised Riyadh's role in countering regional rival Iran and the importance that lucrative US arms sales to Saudi Arabia have for American jobs.Khashoggi, a USA resident, went missing after entering the consulate on October 2 to obtain documents for his upcoming marriage.
In its report, titled Saudis' Image Makers: A Troll Army and a Twitter Insider, the daily claimed that the Saudi administration is conducting operations on the social media platform Twitter to silence opposing names overseas and inside Saudi Arabia.
If verified, the recording would make it hard for the United States to accept the Saudi version that Khashoggi's death was effectively an accident.
Several of the 15 Saudi suspects who were in Istanbul when Khashoggi went missing have close links to Saudi Arabia's security forces.
The Saudi government has released an explanation of how they believe journalist Jamal Khashoggi died at the Saudi consulate in Istanbul, Turkey.More news: Protesters clog streets of London to demand new Brexit vote
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The Saudi statement confirming the death of Khashoggi in a fist fight did not appear to be credible for some U.S. lawmakers, who demanded that Riyadh be held accountable for the incident. "It was a good first step", Trump said of the move. If that support were now to ebb away then the crown prince could find himself dangerously isolated at court.
What has the US said about this?
"So long as investigations are underway, so long as we don't know what happened there, there is no reason to take positive decisions on arms exports to Saudi Arabia", he told German public television's Tagesthemen program.
Germany and France on Saturday called Saudi Arabia's explanation of how Khashoggi died incomplete.
The overnight announcement in Saudi State media also said a royal court adviser close to Saudi Crown Prince Mohammed bin Salman was sacked along with three leaders in the kingdom's intelligence services and other officials. His body has not been found.
"There were no orders for them to kill him or even specifically kidnap him", said the official, speaking on condition of anonymity.
Khashoggi also criticised Prince Mohammed's lack of "proper advisers".
Jamal Khashoggi: What happened to the Saudi Arabian journalist? "I've heard no tape, I've seen no transcript", Pompeo told reporters late this past week.
However, the admission, which came amid increasing pressure on Riyadh, has done little to ease global demands for accountability.