US President Donald Trump says Saudi Arabia functions as a counterbalance to Iran in the Middle East region and this has put Washington in a “complex” situation with regards to Riyadh’s explanation about dissident journalist Jamal Khashoggi’s death.

“They [Saudis] have been a great ally in the Middle East. We need them as a counter-balance to Iran. So it's not the simplest solution. It's not the simplest situation to be in,” Trump said Friday.

The remarks came after Riyadh admitted that Khashoggi, who had gone missing after entering the Saudi consulate in Istanbul on October 2, was killed in a "fight with people who met him” inside the building.

Trump told reporters that he found the account “credible” although he had to talk to Saudi Crown Prince Mohammed bin Salman to clear up a few more things.

Asked whether he would stay true to his pledges of punishing the perpetrators of the apparent murder, Trump said the situation needed to be handled with care because billions of dollars in arms sales were at stake.

“Saudi Arabia has been a great ally but what happened is unacceptable,” Trump said.

“I would prefer if there is going to be some form of sanction, or what we may determine to do if anything,” the president said. “But I would prefer that we don't use as retribution, canceling the $110 billion-worth of work, which means 600,000 jobs.”

Various reports citing Turkish officials state that the anti-Riyadh journalist was ambushed, tortured, killed and dismembered under direct orders from bin Salman.

The incident has grown into a public relations nightmare for the kingdom and the crown prince in particular.

In an attempt to contain the damage, Riyadh said it had sacked several officials, including Ahmad al-Assiri, a top general in the General Intelligence Agency (GIA) and a close aide to bin Salman.

Furthermore, Saudi King Salman ordered the formation of a ministerial committee to restructure the GIA. Ironically enough, the committee would be headed by none other than bin Salman himself.