DUBAI - The United States and Dubai are negotiating an end to the desert emirate's Iranian oil imports to head off the threat of US President Obama sanctioning a trade that has riled Gulf Arab oil producers, industry sources and diplomats said.

Washington in the summer tightened controls on financial transactions for importing Iranian condensate, a light hydrocarbon, as part of US efforts to starve Tehran of revenues for its disputed nuclear program.

But Dubai is still buying the oil while US officials encourage the Dubai-government-owned Emirates National Oil Company (ENOC) to find another source of supply.

"The Americans did ask ENOC to stop importing but this is still going on," a UAE oil industry source said of the continued imports by fuel-poor Dubai.

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