The United States took steps to throw a financial lifeline to rebels controlling eastern Libya while forces loyal to Muammar Gaddafi focused their firepower on pockets of resistance in the west.
Rebels said Gaddafi's forces fired Russian-made Grad rockets, which rights groups say should not be used in civilian areas, at the rebel-held western towns of Misrata and Zintan following NATO strikes to free Misrata's port.
In Zintan, the rebels struck back.
"Rebels attacked posts belonging to Gaddafi forces east of Zintan in the early evening. The posts have been used to fire rockets into Zintan," the spokesman, called Abdulrahman, told Reuters.
"The rebels destroyed at least three tanks and captured two others."
Remoter areas of western Libya also came under fire from forces loyal to Gaddafi, trying to break an uprising against his four-decade rule that has put most of the east in rebel hands since it began in mid-February.
"Many in the Western Mountains in towns such as Yefrin, Zintan and Kabau are being killed by this indiscriminate shelling," senior rebel National Council spokesman Abdel Hafiz Ghoga told a news conference in Benghazi in the east.
The United States voiced confidence in the Benghazi-based main opposition council Wednesday as the U.S. Treasury moved to permit oil deals with the group, which is struggling to provide funding for the battle-scarred areas under its control.
The order by the U.S. Treasury Department's Office of Foreign Assets Control may help to clear up concerns among potential buyers over legal complications related to ownership of Libyan oil and the impact of international sanctions.
The first major oil shipment from rebel-held east Libya, reported to be 80,000 tons of crude, was expected to arrive in Singapore on Thursday for refueling but oil traders told Reuters finding a buyer was not straightforward, with many of the usual traders still worried about legal complications.
A tanker booked for Italian oil company Eni to carry crude to Italy from Gaddafi-held territory in Libya never arrived in port and left empty last week because the sanctions meant the government would not have got paid, trade sources said.
"They didn't want the crude to go, because they wouldn't have gotten any money for it," an industry source said on Wednesday, adding, "They could use it to refine into gasoline."
FIGHTING OUT OF SIGHT
Residents say pro-Gaddafi forces have been surrounding mountain-top towns in western Libya, cutting them off from food, water and fuel supplies and unleashing indiscriminate bombardments on their homes with rockets and mortars.
Libyan officials deny targeting civilians, saying they are fighting armed gangs and al Qaeda sympathizers who are terrorizing the local population.
Rebels who seized a remote post on the western border with Tunisia hurriedly dug trenches after hearing that forces loyal to Gaddafi were on their way to re-take the crossing.
The sound of distant explosions could occasionally be heard coming from the Libyan side of the border, signs of a battle that has been going on for weeks in the Western Mountains region, largely out of sight of the outside world.
The rebel spokesman in the Western Mountains town of Zintan, scene of some of the region's most intense fighting, said there was heavy bombardment there on Wednesday, that at least 15 people were wounded and five houses destroyed.
Misrata also came under fire from Grad missiles, the rebels said, after NATO air strikes forced Gaddafi's troops away from the port, the only connection the besieged city has with the outside world.
Both the rebels and the European Union said the shelling of the Misrata port threatened a vital supply and rescue route.
"We are receiving reports of hospitals being overwhelmed by a growing number of wounded," EU Commissioner Kristalina Georgieva said in a statement.
An aid ship took advantage of a brief lull in the fighting to rescue Libyans and a French journalist wounded in the fighting in Misrata, along with migrant workers, from the western rebel enclave and headed for Benghazi, center of the rebel heartland in the east.
"Despite heavy shelling of the port area ... about 935 migrants and Libyans have been rescued and are now safely en route to Benghazi," the International Organization for Migration (IOM) said.
A U.N. human rights group is in Libya to investigate accusations pro-Gaddafi forces have violated human rights and attacked civilians.