HE DOESN'T WANT TO DEFY THE U.S., BUT THE PRIME MINISTER OF IRAQI KURDISTAN SAYS THE KURDS MAY BE SELLING FUEL OIL TO IRAN ? "60 MINUTES"

The prime minister of Iraqi Kurdistan, a U.S. ally, admits his region may be selling fuel oil products to Iran. Though it may seem to undermine U.S. sanctions against Tehran, the prime minister stresses the sales are not meant to offend the U.S. Lesley Stahl speaks to Prime Minister Barham Salih for a 60 MINUTES story about the end of America's combat mission in Iraq to be broadcast Sunday, Oct. 3 (7:00-8:00 PM, ET/PT) on the CBS Television Network.

During their visit, Stahl and her crew videotaped a long line of fuel oil trucks entering Iran from Kurdistan, a semi-autonomous region of Iraq. When Stahl asked Salih about what she observed, he responds, "Look, what is happening, fuel oil products from refineries are being sold to Iran...not to Iran, actually: it's going through Iran to the Gulf and sometimes to Turkey," he says. Stahl interrupts him, "But also to Iran." The prime minister replies, "Iran could be buying. That's why I'm not saying no. I want to assure you we value our relationship with the United States and we don't want to be on the wrong side of the United States," says Salih.

When told Americans would be shocked to learn about the sales, Salih says, "Listen, we live here. To think that somehow we can build a wall between Iraq and Iran is just not on," he tells Stahl. "This is a reality of this part of the world."

Another person who says he's shocked by the sales is Hussein Shahristani, Iraq's oil minister in Baghdad. He says the central government has not received "a single dinar" from Kurdistan's fuel oil sales. The dispute over oil is one of the many possible sources of conflict that could erupt in Iraq once the U.S. military completely withdraws from the country by the end of next year.

"This cannot be allowed to continue," asserts Shahristani, "that the Iraqi oil is taken out from Iraqi territory, sold, the money is collected by we don't know who. Not deposited." He says, "This is one of the major points that needs to be resolved very quickly."

Another dispute that has almost led to violence between the Iraqi government and Kurdistan, which has its own army, are the competing claims over the disputed territories that lie between Iraqi Kurdistan and the rest of the country, along the so-called "trigger line."

Stahl asked Gen. Ray Odierno, who commanded U.S. troops in Iraq until last month, about the land dispute between Iraq and Kurdistan. Odierno responded, "There is a lot of mistrust, so we're trying to build trust between them." Odierno took Stahl to see the military checkpoints and patrols he created along the "trigger line" which consist of Kurdish, Iraqi and American troops. For the time being, he says they have eased the tensions between Iraqi Arabs and Kurds.