In appreciation of Libya's decision to abandon its weapons of mass destruction programme, the Bush administration is expected to facilitate the return of US oil companies to the North African country.
Bush administration officials on Wednesday said an executive order first imposed by then President Ronald Reagan curtailing US business transactions in Libya would be lifted shortly.
"Things are headed in that direction," one official said.
But major oil projects could still be delayed until other US trade sanctions are lifted and Washington drops Libya from its list of state sponsors of terrorism.
State Department spokesman Adam Ereli declined to comment on specific measures under consideration to normalise US-Libyan relations.
"This is a process that is going to move one step at a time," Ereli said.
Last month, Washington had rolled back travel restrictions and cleared the way for US firms to start negotiating their return to Libya.
As a further sign of normalising ties, US Assistant Secretary of State William Burns met with Libyan leader Muammar Qadhafi on Tuesday, becoming the highest-level US official to visit in more than 30 years.
Organisation of Petroleum Exporting Countries (OPEC) member Libya produces about 1.4 million barrels of oil daily.