The U.S. military says troops shot and killed seven Iraqis during a clash with an armed group that was trying to steal oil from a pipeline in central Iraq.

Brigadier General Mark Kimmitt said an Iraqi informant led the troops to a group of about 40 armed Iraqis trying to steal oil from a pipeline. "Forces attempted to apprehend the Iraqis, but the Iraqis opened fire on them. The units returned fire, killing seven personnel and destroying three fuel tankers," he said.

The incident occurred Sunday near the town of Samarra. The U.S.-led coalition has blamed sabotage, theft and smuggling for continuing fuel shortages in Iraq, a country that has one of the highest oil reserves in the world. The lack of fuel has been a major source of frustration for Iraqis.

In a separate incident, the military says one U.S. soldier was killed and two wounded by a roadside bomb in Baghdad on Monday.

In another development, U.S. and Iraqi officials say they are going ahead with agreed upon plans for the transition from U.S. occupation to an Iraqi interim government.

Coalition spokesman Dan Senor said disagreements over some details of that transition are part of the new democratic process in Iraq. "We view this as a healthy sign that there is this diversity of opinion and that diversity of opinion is freely expressed and protected," he said.

On Sunday, one of Iraq's most influential Shi'ite clerics, Grand Ayatollah al-Sistani, warned of growing instability if the United States goes ahead with plans to hand over power to an unelected interim government.

The current transition plan calls for nationwide caucuses to chose a Transitional National Assembly, which, in turn, would appoint an interim government in June. That government would run the country until elections late next year.

Ayatollah al-Sistani, however, wants a directly elected government from the outset. He says anything else lacks legitimacy.

Coalition spokesman Dan Senor says those views are not at odds with the Coalition Authority. "Ayatollah Sistani has been very clear that he wants democratic direct elections. That is a clear vision for Iraq based on democratic principles. We may have discussions, the Governing Council may have discussions with various leaders how best to get there. But the political and religious leaders we're hearing from share the basic principles with us about the need for a democratic, free Iraq," he said.

Iraqi and coalition officials say the country is simply not yet prepared to hold national elections.