A senior Kurdish official said thousands of heavily armed fighters had been deployed to resist the offensive "at any cost" and called for worldwide intervention with the federal government in Baghdad to prevent the confrontation worsening. "The imposition of a status quo by force over the disputed areas is unacceptable".
Hemin Hawrami Tweeted early Friday that Hashd al-Shaabi fighters were preparing "to attack oil wells and areas controlled by Peshmerga forces", loyal to northern Iraq's Kurdish Regional Government (KRG).
"Their order is to defend at any cost".
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Hawrami urged the worldwide community to intervene and call on Iraq's prime minister, Haider al-Abadi, to "order PMF to pull back if he can or if they listen to him". "Just defend and roll them back if they attack", the senior adviser to Barzani said.
The rise in tensions came two weeks after Kurdish voters overwhelmingly backed independence in a non-binding referendum that the central government condemned as illegal.
Polling was held in the three provinces that have long formed an autonomous Kurdish region as well as neighbouring areas, including Kirkuk, that Kurdish forces seized from the Islamic State of the Iraq and the Levant (ISIL, also known as ISIS) group during the fightback against the armed group's 2014 offensive through areas north and west of Baghdad.
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The Kurdistan Regional Security Council (KRSC) said that the Iraqi army and the PMF had been deploying tanks and heavy artillery to Bashir and Taza Khurmatu.
In some areas, the Iraqi forces have moved two to three kilometres from Kurdish Peshmerga positions, Al Jazeera's Charles Stratford reported from Erbil.
"Intelligence shows intention to take over nearby oil fields, airport and military base", it added.
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The Kirkuk province along with parts of the provinces of Nineveh, Saladin (northern Iraq) and Diyala (eastern Iraq) are disputed between Baghdad and the KRG and inhabited by a mixture of ethnic Kurds, Arabs, and Turkmen. "Kurdistan continues calling for dialogue and peaceful means to settle differences".