The U.S. State Department's acting inspector general says he is investigating the department's possible role in lucrative oil deals between Iraq and Western oil companies.
U.S. policy has been to discourage any such deals because Iraq does not yet have a national oil law that would fairly distribute the revenue.
Acting Inspector General Harold Geisel writes in a letter to lawmakers that he has started a review of oil contracts, oil field development and U.S. policy in Iraq.
The inquiry comes after four U.S. Democratic senators: Charles Schumer of New York, Carl Levin of Michigan, John Kerry of Massachusetts and Claire McCaskill of Missouri, requested an investigation.
Earlier this month, a U.S. congressional committee presented evidence that State Department officials may have encouraged a deal between the U.S.-based Hunt Oil company and Iraq's Kurdish regional government.
The State Department has denied it tried to facilitate any oil deals.
Iraq's parliament has yet to approve the proposed oil law because of disputes among Shi'ite, Sunni and Kurdish lawmakers.
The Kurdish government has finalized its own energy law and has signed contracts with international oil companies despite the absence of national oil legislation. The Oil Ministry in Baghdad has called those deals illegal.
Some information for this report was provided by AP.