US president Donald Trump has said he thinks the Saudi explanation for the death of Jamal Khashoggi is "credible".
Mr Khashoggi went missing on 2 October during a visit to the consulate to get marriage papers and, after weeks of pressure, Saudi Arabia has admitted he died after a fight between him and others at the consulate.
Eighteen people have been arrested and countries such as Turkey have accused Saudi Arabia of a state-sponsored killing.
Referring to a major US arms deal with the kingdom, Mr Trump said: "I would prefer, if there is going to be some form of sanction or what we may determine to do, if anything... that we don't use as retribution cancelling $110bn worth of work, which means 600,000 jobs."
When asked if he found the Saudi explanation credible, he said: "I do, I do", adding: "It's early, we haven't finished our review or investigation, but... I think it's a very important first step."
He insisted the Saudi leaders had not lied to him when denying prior knowledge of what had happened to Mr Khashoggi, adding that the US needed Saudi Arabia as a counterbalance to Iran.
White House press secretary Sarah Sanders saying Mr Khashoggi's death was a "tragic incident".
She said: "The United States acknowledges the announcement from the Kingdom of Saudi Arabia that its investigation into the fate of Jamal Khashoggi is progressing and that it has taken action against the suspects it has identified thus far.
"We will continue to closely follow the international investigations into this tragic incident and advocate for justice that is timely, transparent, and in accordance with all due process.
"We are saddened to hear confirmation of Mr Khashoggi's death, and we offer our deepest condolences to his family, fiancée, and friends."
Mr Khashoggi, a Washington Post columnist, lived in the US, having fled Saudi Arabia in September last year.
Saudi Arabia said it "expresses deep regret" over his death and King Salman put his son, Crown Prince Mohammed bin Salman, in charge of re-vamping the country's intelligence agency.
Mr Khashoggi had been a critic of bin Salman but Reuters news agency quoted a person familiar with the Saudi investigation as insisting that the crown prince had no knowledge of the operation that killed the journalist.
Adam Schiff, the ranking Democrat on the house intelligence committee, said that Saudi Arabia's claim Mr Khashoggi was "killed while brawling with a team of more than a dozen dispatched from Saudi Arabia is not credible".
Mr Schiff said that if Mr Khashoggi was fighting inside the consulate, he was "fighting for his life with people sent to capture or kill him".
If US president Donald Trump's Republican administration do not hold Saudi Arabia accountable for Mr Khashoggi's death, congress would, he added.
On the Republican side, senator Lindsey Graham, who has been critical of Saudi Arabia in the past, said he doubted the Saudi explanation for Mr Khashoggi's death.
He wrote on Twitter: "To say that I am sceptical of the new Saudi narrative about Mr Khashoggi is an understatement.
"First we were told Mr Khashoggi supposedly left the consulate and there was blanket denial of any Saudi involvement.
"Now, a fight breaks out and he's killed in the consulate, all without knowledge of crown prince.
"It's hard to find this latest "explanation" as credible."
Mr Khashoggi's editor at the Washington Post Karen Attiah was also disbelieving of the Saudi account, writing on Twitter: "What I hate about the statement is the use of the passive construction to imply this was an accident.
"Jamal didn't just 'die during a struggle'. Khashoggi was killed. By Saudi men. In a consulate. His life was taken from him."
She added: "The stupidity of the Saudi explanation is mind boggling.
"Khashoggi was a 60 year old man. What sort of equal 'fight' would he have had against 15 other men?"