He said maintaining "resource security" in the Middle East was a priority.

But PM John Howard has played down the comments, saying it was "stretching it a bit" to conclude that Australia's Iraq involvement was motivated by oil.

Followers of Shia cleric Moqtada al-Sadr yesterday joined a growing chorus of Sunni, Kurdish and Shia opposition to a draft oil law approved by Iraq's cabinet and backed by Washington.

Sadr's supporters said they would not support any law that would allow firms "whose governments are occupying Iraq" -- a reference to the United States, Britain and their coalition allies -- to sign Iraqi oil deals.

"We reject this unclear law that contains a number of points which prevent us from accepting it," said Sheikh Salah al-Obaidi, a Sadr office spokesman in the Shia shrine city of Najaf.

The remarks are causing heated debate as the US-led Iraq coalition has avoided linking the war and oil.

Australia was involved in the invasion of Iraq in 2003, and has about 1,500 military personnel still deployed in the region.

There are no immediate plans to bring them home.

In comments to the Australian Broadcasting Corporation, Mr Nelson admitted that the supply of oil had influenced Australia's strategic planning in the region.