BAGHDAD,(Reuters) – A small but influential Shi’ite Islamist party said it was pulling out of talks on forming a new Iraqi government on Friday, complaining of U.S. interference.

The withdrawal of the Fadhila party, part of the Alliance bloc, may help end a struggle over the key post of oil minister.

The party had been pushing its own candidates against Hussain al-Shahristani, the choice of bigger Alliance groups.

The row over the oil ministry, in control of the world’s third biggest reserves of crude and at the heart of efforts to revive Iraq’s shattered economy, has been a major reason for delay in efforts to form a government in recent days.

“We will not return to the negotiating table and we have announced our final position. We withdraw from the formation of the government and we will stay in parliament to express the voice of the people,” spokesman Sabah al-Saadi told reporters.

He criticised other parties for trying to force candidates for ministries on the Alliance’s prime minister-designate, Nuri al-Maliki, as well as pressure from the United States.

Maliki has another 10 days under a one-month constitutional deadline to present his cabinet to parliament.

“The current negotiations are subject to external pressures from the American ambassador in Iraq,” Saadi added.

U.S. envoy Zalmay Khalilzad has played a major role in mediating in Iraq’s political disputes for the past year. He has stressed that Washington, frustrated by the delay in forming a government after December’s election, now wants technically competent ministers appointed to run Iraq for the next four years as it tries to reduce the U.S. presence.

Washington and Iraqi leaders hope that a grand coalition of majority Shi’ite Muslims, once-dominant Sunni Arabs and ethnic Kurds can stem sectarian and ethnic violence that has raised the prospect of an all-out civil war.

There is also a lack of agreement on filling the sensitive ministries of interior and defence with figures free of ties to militias that have flourished in post-Saddam Hussein Iraq.

Leaders from the Sunni minority — and, more discreetly, the United States — are demanding the removal of the interior minister, accused of allowing Shi’ite police death squads to operate.

Fadhila is one of over a dozen parties in the United Alliance which has a near majority in parliament and has a representative on the bloc’s seven-strong steering committee. It had been pressing to have a Fadhila member named oil minister.

Among its candidates was the present minister Hashem al-Hashemi.

Other Alliance negotiators have been pressing the case for Hussain al-Shahristani, an independent member of the Alliance. He now appears in a strong position to secure the post, over Oil Ministry technocrat Thamir Ghadhban.

Shahristani is a nuclear scientist by training. Tortured and imprisoned by Saddam for, he says, refusing to work on a nuclear arms programme, he was once seen as a potential prime minister and became a deputy speaker of parliament. He has been criticised by minority Sunni Arabs as too rigid in his attachment to Shi’ite sectarian interests. He is seen as close to top Shi’ite cleric Grand Ayatollah Ali al-Sistani and played a role in forming the Alliance, with Sistani’s blessing, as means of avoiding a split in the Shi’ite vote.

Oil industry officials have voiced some reservations about Shahristani’s ability to lead the ministry, which provides almost all Iraq’s state revenue and is vital to the rebuilding of the devastated economy.

Several officials said they were concerned that Shahristani, despite his technical background, has little experience of the sector oil and a reputation as being unreceptive to advice.

Years of war and then international sanctions in the 1990s ravaged production under Saddam Hussein. Since the U.S. invasion, sabotage by Sunni insurgents opposed to the occupation and the Shi’ite-led government has further curbed exports.

Reviving those sales is vital to bringing prosperity to Iraq. Many hope new wealth could calm violent passions that see dozens killed or forced from their homes every day. But the division of oil revenues is also a major bone of contention.

Sunnis, clustered in central Iraq with few resources, fear that Shi’ites in the south and Kurds in the north may use the federal provisions of a new constitution to corner the oil.

Parliament is due to review the constitution shortly.

Washington is keen for calm to allow it to start withdrawing troops from a conflict that is increasingly unpopular at home. The Army Reserve said this week it had blocked the resignations of about 400 officers since 2004 to maintain forces for Iraq.

More than 2,400 U.S. troops have died in the war, including four Marines in an Abrams tank who died when their vehicle fell off a bridge into a canal near Falluja on Thursday.