For the second consecutive day, a convoy carrying foreign contractors has been attacked in Iraq. The U.S. military is reporting at least two people killed. An apparently worsening security situation comes just days before Iraqis are set to take full control of their country from coalition forces.

Tuesday saw another day of attacks by suspected insurgents, including an ambush on a convoy of vehicles carrying the foreign contractors working for the U.S. led coalition.

"Two of the vehicles, I believe, had some persons in it that were killed. Small arms fire attack, shot from the overpass against three vehicles passing," said U.S. military spokesman General Mark Kimmitt.

U.S. authorities have not released the nationality of those believed killed, but this attack comes a day after at least 13 people, including several Westerners, died when another convoy carrying civilian contractors was the target of a suicide car bomb in Baghdad.

A group led by accused Jordanian terrorist Abu Musab al-Zarqawi has now claimed responsibility for that attack, and in a message carried on an Islamic website, the group vowed there would be more as long as American troops remain in Iraq.

In a separate attack, saboteurs Tuesday blew up a portion of a pipeline carrying oil south of Basra, interrupting Iraq's oil exports and briefly driving up the price of crude on world markets.

The ability of Iraqis to take control of their own security is being increasingly tested in the days leading up to the scheduled handover of power on June 30.

At the White House, the attacks prompted reporters to ask President Bush whether he believes Iraqis are ready to take on the job. "The Iraqi people are going to have to figure out how to make sure their country is secure enough for a free government to emerge and what you're watching is a government learning how to protect itself," he said.

Iraqi Prime Minister Iyad Allawi says he expects terrorist attacks to increase as the handover of power approaches but says there will be a strategy to defeat them.

With the coming transfer of power, U.S. and Iraqi leaders are now discussing how and when to hand over to Iraqi authorities former President Saddam Hussein, who remains in U.S. military custody. One issue President Bush says he is concerned about is ensuring that the ousted Iraqi leader does not return to power.

"I just want to make sure that when sovereignty is transferred, Saddam Hussein stays in jail. That's just a matter of discussion and understanding," he added.

Iraqi interim President Ghazi al-Yawar has concerns as well.

"We must first make sure that we can maintain protection for his life until he goes to trial. We must make sure that the trial goes, as a legal process, he has his own fair chance of a defense," he said.

Neither the U.S. nor the Iraqi government is saying exactly when custody of Saddam Hussein will be transferred and a U.S. spokesman in Baghdad says that may not happen until after fighting in Iraq ends.