The United States has refrained from blaming the crown prince for the murder.
Unlike European monarchies the House of Saud is made up of hundreds of princes, with the power of succession drawn across tribal lines, rather than automatically going to the eldest son.
The source said the U.S. initiative includes an option to pin the Saudi journalist's murder on an innocent member of the Al Saud family, but that person has not yet been chosen.
The United States, a key ally in economic and security terms, is likely to be a determining factor in how matters unfold in Saudi Arabia, the Saudi sources and diplomats say.
Although Mohammed Ali al-Huthi is head of the Iran-linked rebels' Higher Revolutionary Committee, he is not their ultimate decision-maker - that power lies with supreme leader Abdulmalek al-Huthi.
The public prosecutor also exonerated the powerful crown prince of involvement in the murder in the Saudi consulate in Istanbul on October 2, but the Central Intelligence Agency and other USA agencies have reportedly concluded that he ordered the assassination.
The moves come as the administration of US President Donald Trump grapples with how to deal with the fallout from the murder of Khashoggi, a Saudi journalist who had a legal resident status in the US and worked for The Washington Post.
Turkey has called for an global investigation of the killing of Khashoggi, a Washington Post columnist.
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But Cartwright added that he wants to hear the arguments when the caucus meets privately next week to vote on the leadership team. Trahan told the Sun there was no one else with Pelosi's experience and proven track record and that the stakes are too high.
According to one well-placed Saudi source, many princes from senior circles in the family believe a change in the line of succession "would not provoke any resistance from the security or intelligence bodies he controls" due to their loyalty to the wider family. "He feels empowered to crush his potential rivals within the ruling family by his close relationship to President Trump and Jared Kushner".
According to Turkish officials, an audio recording shows that Khashoggi was strangled to death and dismembered soon after entering the Saudi mission.
The pressure is coming from both Democrats and Republicans in Congress and USA allies overseas.
King Salman, 82, is aware of the consequences of a major clash with the United States and the possibility that Congress could try to freeze Saudi assets. But they added that he looked burdened and anxious.
Crown Prince Mohammed had overtaken more senior and influential princes in Saudi Arabia to become the kingdom's most powerful man after his father, King Salman, took to the throne, in 2015.
Despite the controversy over Khashoggi's killing, MbS is continuing to pursue his agenda. Heiko Maas said there are still "more questions than answers".