The United States has ordered a Russian oil tanker seized by an American warship in the Gulf on Wednesday to divert to Oman.

The vessel was seized on suspicion of illegally transporting Iraqi oil in violation of UN sanctions.

The Russians, who have demanded the immediate release of the ship and its crew, say the oil came from Iran.

American State Department spokesman James Foley said that once the tanker - the Volgoneft 147 - had docked in an Omani port, the oil would be off-loaded and the crew was likely to be released.

Other officials said that, if an analysis of the oil proved that it was of Iraqi origin, the cargo would be off-loaded and then sold, with a portion of the proceeds being used to pay for the UN sanctions monitoring operation.

Earlier, American Defence Secretary William Cohen said that checks on a Russian oil tanker seized by the US navy in the Gulf would take up to two more days to complete.

He said illicit oil exports from Iraq were increasing, and that they were concerned about the involvement of ships registered in Russia.

The Russians have warned that relations between Moscow and Washington could be damaged as a result of the incident.

Moscow anger

It has lodged a formal demand for the release of the ship, which is under the control of US navy personnel operating as part of a multinational monitoring force.

Russian Foreign Minister Igor Ivanov said he understood the need to enforce sanctions against Iraq, but that did not justify holding the tanker for an extended time.

Deputy foreign minister, Vasily Sredin, demanded its immediate release, adding: "We will get it back and save both the ship and the crew."

Iraq joins denials

In Iraq, the official Al-Thawra newspaper has dismissed the suspicions of smuggling and accused the US of spreading lies.

"The Americans are making up stories, some backed up with false figures, about vessels loaded with Iraqi oil and other Iraqi by-products," the newspaper said.

The US authorities allowed two diplomats from the Russian consulate in the United Arab Emirates to board the tanker on Friday, and officials in Moscow said active diplomatic contacts were underway to settle the matter quickly.

Russia is a strong supporter of the eventual lifting of the UN economic embargo against Iraq.

Baghdad is banned from most international commerce, but is allowed to export up to $5.2 billion in oil every six months in order to buy food, medicine and other essentials for its people, and spare parts for its oil industry.

The Americans say that illicit oil exports from Iraq are currently averaging 100,000 barrels a day.

The US defence secretary said on Friday he believed Iraqi president Saddam Hussein would do whatever he could to try to circumvent the sanctions.

"If he can get away with it - if there's a laxity on the enforcement part - then he will seek to exploit it," he said