By Aziz El Yaakoubi

DUBAI (Reuters) - - Saudi Arabia said on Saturday that Saudi journalist Jamal Khashoggi has died, and said it fired two senior officials over the incident that has provoked an international outcry and strained relations between Riyadh and the West.

A statement from the Saudi public prosecutor said a fight broke out between Khashoggi and people who met him in the consulate and led to his death.

"The investigations are still underway and 18 Saudi nationals have been arrested," the statement on state media said, adding that royal court adviser Saud al-Qahtani and deputy intelligence chief Ahmed Asiri have been fired from their positions.

Khashoggi, a critic of Saudi Crown Prince Mohammed bin Salman, went missing after entering the consulate on Oct. 2 to obtain documents for his upcoming marriage.

Saturday's comments marked the first time since Khashoggi went missing that the Saudis admitted to his death.

Turkish officials had said they believed he was killed in the building. Saudi Arabia had previously denied the allegations and said Khashoggi had left the building shortly after.

King Salman also ordered the formation of a ministerial committee headed by the crown prince to restructure the general intelligence agency, state media said.

The disappearance of Khashoggi, a U.S. resident and Washington Post columnist, strained relations between Saudi Arabia and Western allies. Arab allies have rallied to Riyadh's support, but Western pressure has intensified on Saudi Arabia to provide convincing answers.

Before the Saudi announcements, U.S. President Donald Trump said he might consider sanctions against Saudi Arabia over the disappearance of Saudi journalist Jamal Khashoggi, while emphasizing the importance of the U.S.-Saudi relationship.

In Istanbul, Turkish prosecutors investigating Khashoggi's disappearance questioned Turkish employees of the Saudi consulate on Friday, widening the hunt for clues in a case straining Riyadh's alliance with Western powers.

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Turkish police searched a forest on Istanbul's outskirts and a city near the Sea of Marmara for Khashoggi's remains, two senior Turkish officials told Reuters, after tracking the routes of cars that left the consulate and the consul's residence on the day he vanished.

Investigators have recovered samples from searches of both buildings to analyze for traces of Khashoggi's DNA.

Speaking to reporters in Scottsdale, Arizona, Trump said it was too early to say what the consequences for the incident might be, but that the U.S. Congress would be involved in determining the American response.

Asked whether Saudi sanctions were one of the measures he was considering, Trump said, "Could be, could be," though he provided no details.

"We're going to find out who knew what when and where. And we'll figure it out," Trump added.

The U.S. Congress is controlled by Trump's fellow Republicans, some of whom have called for tough action against Saudi Arabia.

"I will very much listen to what Congress has to say. They feel very strongly about it also," Trump said.

Trump, who said on Thursday he believes Khashoggi is likely dead and has warned of a potential "very severe" response, has appeared unwilling to distance himself too much from the Saudis, citing Riyadh's role in countering Iranian influence in the Middle East and lucrative potential arms deals.

"Saudi Arabia has been a great ally, they've been a tremendous investor in the United States," Trump said, adding, "That's why this is so sad."

"They agreed to spend $450 billion on buying in and investing in the United States, so I hope we can keep that open. ... There are plenty of other things we can do," he said, adding, "I might know a lot by Monday. I know a lot already."

State-run Anadolu news agency said the Turkish prosecutor's office had obtained testimony from 20 consulate employees, and 25 more people including foreign nationals would be questioned.

The consulate employees questioned included accountants, technicians and a driver, Anadolu said. The investigation is being conducted by the prosecutor's terrorism and organized crime bureau, it added.

Turkey said it had not shared with any country audio recordings purportedly documenting Khashoggi's murder inside the consulate, dismissing reports it had passed them to the United States.

"We will share the results that emerge transparently with the whole world," Turkish Foreign Minister Mevlut Cavusoglu said.

Turkish pro-government newspaper Yeni Safak has published what it said were details from the audio, including that his torturers severed Khashoggi's fingers during an interrogation and later beheaded and dismembered him.

Khashoggi's disappearance has tarnished the crown prince's reputation and deepened questions about his leadership, prompting Saudi King Salman to intervene, five sources with links to the Saudi royal family told Reuters.

The crown prince has painted himself as the face of a vibrant new kingdom, diversifying its economy away from oil and introducing some social changes. Other moves have faced criticism, including involvement in Yemen's war, the arrest of women activists and a diplomatic dispute with Canada.

U.S. Treasury Secretary Steven Mnuchin and senior ministers from France, Britain and the Netherlands have abandoned plans to attend an Oct. 23-25 investor conference in Riyadh.

On Friday, the CEOs of Deutsche Bank and ABB , plus Airbus' defense chief and energy historian Daniel Yergin, joined a list of Western business executives who have withdrawn.

Pakistan's prime minister and a delegation led by Russian Direct Investment Fund head Kirill Dmitriev plan to participate. Britain's BAE Systems is sending senior representatives.

A conference spokesperson confirmed the conference would proceed with an updated program that includes heads of state from the Arab world, Africa and Asia.

(Additional reporting by Tuvan Gumrukcu in Ankara, Brendan O'Brien and Mohammed Zargham in Washington, Andrea Shalal and Maria Sheahan in Berlin, Aziz El Yaakoubi in Dubai, John Revill in Zurich, Katie Paul in Dubai; Writing by Yara Bayoumy; Editing by William Maclean, Alistair Bell and Will Dunham)