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The US Central Command in Qatar later acknowledged that its warplanes might have attacked the convoy.
The BBC's world affairs editor John Simpson, who also suffered minor injuries in the attack, said a bomb was dropped from a US plane 10 to 12 feet (about four meters) from where he was standing.
The convoy of eight or 10 cars was being escorted by US special forces travelling in two trucks.
"The Americans saw this convoy and they bombed it and they hit their own people. They've killed a lot of ordinary characters. I've counted 10 or 12 bodies around us, so there are Americans dead.
"This was a really bad own goal by the Americans. We don't know how many Americans are dead," Simpson said.
A senior Kurdish official who was travelling with the convoy "may have been injured, maybe even dead," he added.
"This is just a scene from hell here, all the vehicles on fire. There's bodies burning around me, there's bodies lying around, there's bits of bodies on the ground," he said.
A high-ranking Kurdish official in Iraq told AFP that Wajih Barzani, the head of special forces of the Kurdistan Democratic Party (KDP) and the brother of KDP leader Massoud Barzani, was seriously wounded in the attack.
PDK external relations official Hoshyar Zebari said, "There was firing and the American special forces asked for close air support, but unfortunately two aircraft bombed the joint forces."
"We have no exact figure of the number of dead, but there are many wounded," Zebari said, adding, "we are worried" about Barzani, 33.
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