Armed Kurdish forces took control of two Iraqi oilfields near the disputed northern city of Kirkuk on Friday, replacing Arab workers with Kurdish personnel.
The national oil ministry in Baghdad condemned the takeover of the production facilities at the Kirkuk and Bai Hassan fields and called on the Kurds to withdraw immediately to avoid "dire consequences".
The move came a month after the peshmerga (armed Kurdish forces) took control of the nearby city of Kirkuk, following the withdrawal of Iraqi armed forces in the face of a lightning assault by Sunni extremist militants belonging to the Islamic State of Iraq and Greater Syria (ISIS), who have seized large parts of north and west Iraq.
The Kurds have since said those swathes of land are theirs to keep, and announced plans to hold a referendum on independence.
Dimmed hopes of unity government
The violence has also escalated political tension between Prime Minister Nuri al-Maliki and Kurdish leaders, who have pulled out of Maliki's Shi'ite-led government, further crushing hopes of forming a unity government to counter the raging Sunni militant insurgency.
"...We appeal to rational Kurds about the need to understand the danger of such [an] attitude and to ask the people responsible for this disorderly behaviour to withdraw immediately from these sites in order to avoid dire consequences," a ministry spokesman said.