The United States is restoring full diplomatic relations with Libya and removing the North African country from its list of state sponsors of terrorism after 27 years, the State Department announced last Monday.

"We are taking these actions in recognition of Libya's continued commitment to its renunciation of terrorism," said a statement from Secretary of State Condoleezza Rice.

She also referred to "the excellent cooperation Libya has provided to the United States and other members of the international community in response to common global threats faced by the civilized world since September 11, 2001." ( Watch more on what's behind the U.S. move -- 2:02)

The removal from the terrorism list is expected to take place after a 45-day waiting period.

However, Libya will immediately be removed from an annual list of countries that do not cooperate with U.S. anti-terrorism efforts, according to Assistant Secretary for Near Eastern Affairs David Welch.

The move is likely to have a major impact on oil markets and could even bring down fuel prices, CNN's David Ensor reports.