After gathering information from the Turks and the joint team, "the feeling from the leadership was we needed an internal investigation to make sure we're getting the right story here", the official said.
A Turkish official told Reuters on Sunday that the Saudis had said they would allow the consulate to be searched, and that this would happen by the end of the weekend, though he conceded to "flexibility on this date". Turkey believes he was murdered and his body removed.
US President Donald Trump has threatened "severe punishment" if it turns out Mr Khashoggi was killed in the consulate and European allies have called for "a credible investigation" and accountability for those responsible.
In an overnight 60 Minutes interview, the U.S. leader said the consequences of Saudi Arabia being involved in Khashoggi's death would be "severe".
On Sunday, in a thinly veiled threat to cut oil production, Saudi Arabia warned that if it 'receives any action, it will respond with greater action, and that the kingdom's economy has an influential and vital role in the global economy'.
On Monday Benchmark Brent crude oil jumped by $1.49 a barrel to a high of $81.92 amid fears of diminishing supply.
The Arabic-language daily Okaz wrote a headline on Monday in English warning: "Don't Test Our Patience".
The Arab News' headline was above a front-page editorial by Dubai-based real-estate tycoon Khalaf al-Habtoor, calling on Gulf Arab nations to boycott worldwide firms now backing out of a planned economic summit in Riyadh later this month. That includes the CEO of Uber, a company in which Saudi Arabia has invested billions of dollars, as well as billionaire Richard Branson. Ford Motor Co said Chairman Bill Ford has canceled his trip to the Middle East, which included an appearance at the Saudi investment conference.
France, Germany and the United Kingdom have also demanded a credible investigation, saying: "We encourage joint Saudi-Turkish efforts in that regard, and expect the Saudi Government to provide a complete and detailed response".
But in response to Khashoggi's disappearance, media organizations and a growing number of executives have pulled out of a Riyadh investment conference scheduled for next week, dubbed "Davos in the Desert".
The foreign minister of the neighboring island kingdom of Bahrain, Khalid bin Ahmed Al Khalifa, tweeted Sunday night that there should be a boycott of the ride-hailing app both there and in Saudi Arabia.
Oil prices moved only slightly on Monday as analysts said they doubted Saudi Arabia, the word's biggest exporter of crude, would risk worldwide isolation and damage its own finances by cutting back exports at a time when it is pushing through reforms designed to create jobs and diversify its economy.
King Salman spoke to the Turkish president, Recep Tayyip Erdoğan, on Sunday, and it is likely that this call ended the impasse.
"The kingdom affirms its total rejection of any threats and attempts to undermine it, whether through economic sanctions, political pressure or repeating false accusations", a statement by the Saudi government said.
While Turkey and the kingdom differ on political issues, Saudi investments are a crucial lifeline for Ankara amid trouble with its national currency, the Turkish lira.
The Future Investment Initiative is created to showcase Saudi Crown Prince Mohammed bin Salman's Vision 2030 plan, which is highly dependent on foreign investment.
The latest moves come as more leading business figures say they will not attend a major investment conference in Riyadh later this month.
During this period Saudi Arabia has launched a war in Yemen, imposed an embargo on Qatar, arrested dozens of top officials and businessmen in a corruption purge, detained women's rights activists and seen tensions with Canada and Germany rise.
Khashoggi was a critic of the regime in effect led by the Bin Salman since his father appointed him crown prince in June 2017.
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