DUBAI, United Arab Emirates (AFP) — Saudi Arabia warned yesterday it would retaliate against any sanctions imposed on the oil-rich kingdom over the disappearance of journalist Jamal Khashoggi, as the Riyadh stock market plunged on growing investor jitters.

From tech tycoons to media giants, a host of Western companies are now distancing themselves from the Gulf state, imperilling Crown Prince Mohammed bin Salman’s much-hyped economic reform drive.

US President Donald Trump threatened ally Saudi Arabia on Saturday with “severe punishment” if Khashoggi, who has been critical of Prince Mohammed, was killed inside its Istanbul mission.

But Riyadh vowed to hit back against any punitive measures.

“The kingdom affirms its total rejection of any threats or attempts to undermine it whether through threats to impose economic sanctions or the use of political pressure,” an official source said, quoted by state news agency SPA.

He said Riyadh would “respond to any action with a bigger one”, pointing out that the oil superpower “plays an effective and vital role in the world economy”.

According to Saudi-owned Al Arabiya television, the kingdom has “over 30 measures” that it could implement to combat sanctions.

They include using sales of oil and arms, exchange of information between Riyadh and Washington, and a possible reconciliation with regional arch-rival Iran, said the report.

Following Riyadh’s assertion it would retaliate against sanctions, Britain, France and Germany released a joint statement saying they were treating Khashoggi’s disappearance “with the utmost seriousness”.

“There needs to be a credible investigation to establish the truth about what happened, and — if relevant — to identify those bearing responsibility for the disappearance of Jamal Khashoggi, and ensure that they are held to account.”

The trilateral message had been conveyed “directly to the Saudi authorities”, said the statement signed by Britain’s foreign minister Jeremy Hunt, his French counterpart Jean-Yves Le Drian and Germany’s Heiko Maas.

Khashoggi, a Washington Post contributor, vanished after entering the consulate on October 2.

Saudi Arabia insists Khashoggi left the building safely and dismissed accusations that authorities had ordered his murder by a hit squad as “lies and baseless allegations”.

Turkey on Saturday stepped up pressure on Saudi Arabia by accusing the kingdom of failing to cooperate with a probe into the journalist’s disappearance.

Turkish officials have said they believe Khashoggi was killed inside the mission and claims have been leaked to media that he was tortured and even dismembered.

Saudi King Salman spoke to Turkish President Recep Tayyip Erdogan by phone yesterday, during which the monarch affirmed his country’s good relations with Turkey.

“No one will get (to) undermine the strength of this relationship,” the king said, according to a statement from the Saudi foreign ministry.

In the US, White House economic adviser Larry Kudlow said Saudi Arabia should take Trump’s warning over the journalist’s fate seriously.

“When the president warns, people should take him at his word,” he told Fox.

“If the Saudis are involved, if Khashoggi was killed or harmed or whatever, bad outcome here. He (Trump) will take action.”

Saudi Arabia’s embassy in Washington later tweeted to “clarify” Riyadh’s earlier statement.

“The Kingdom of Saudi Arabia extends it appreciation to all, including the US administration, for refraining from jumping to conclusions on the ongoing investigation.”

Investors have also taken fright, prompting Saudi stocks to tumble by around seven per cent at one point yesterday, wiping out their gains for 2018.

The kingdom’s Tadawul All-Shares Index (TASI) lost more than 500 points, diving by seven per cent in the first two hours when trading resumed after the weekend, in panic selling reminiscent of the days after the global financial crisis in 2008.

It later clawed back some losses to close down 3.5 per cent at 7,266.59 points.

Mohammed Zidan, market strategist at Thinkmarket in Dubai, said the drop in Saudi stocks was linked to the uncertainty surrounding the Khashoggi affair.

“The withdrawal of top participants from the Riyadh investment conference has also negatively impacted traders’ sentiment,” he told AFP.

Business barons including British billionaire Richard Branson and Uber CEO Dara Khosrowshahi, as well as media powerhouses like Bloomberg and CNN, have pulled out of next week’s Future Investment Initiative (FII) in Riyadh.

The cancellations have cast a pall on the annual summit at which Prince Mohammed wowed investors last year with talking robots and blueprints for a futuristic mega city.

The withdrawal of Uber’s Khosrowshahi from the event is particularly symbolic as the kingdom’s vast Public Investment Fund (PIF) has invested US$3.5 billion in the ride-hailing app.

Branson, who dropped two directorships linked to Saudi tourism projects around the Red Sea, said claims about Khashoggi’s disappearance would “change the ability of any of us in the West to do business with the Saudi government”.

Washington lobbying firm Harbour group which represented the Saudi government, has also terminated its US$80,000 per month contract, the firm’s managing director Richard Mintz said.

Additionally, actor Gerard Butler pulled out of a trip to the kingdom, where he was scheduled to attend the premiere of his new movie Hunter Killer.

“We heard about Khashoggi going missing the day before we were supposed to leave… and it just didn’t feel like a smart move,” the 48-year-old Scot told CNN on Saturday.