Iraqi central government is trying to reassert control over South Oil, the state-owned oil company.
In May, Baghdad tried to reassign the company's top executive Jabber el-Leaby to an advisory position at the Oil Ministry, a move many observers see as a demotion.
Mr. Leaby is widely credited by U.S. officials and Iraqi oil technocrats with having led South Oil's surprisingly successful effort to maintain output throughout the nation's chaotic insurgency over the past five years.
South Oil is resisting Mr. Leaby's removal, and the squabble has some Iraqi officials and Western diplomats worried the company is being sucked into Iraq's crippling political infighting.
South Oil's future could affect petroleum consumers around the world. It pumps some two million barrels a day -- the lion's share of Iraqi output and more than 2% of global demand.
