Iraqi security forces have launched a “major operation” in the Kurdish-held region of Kirkuk, advancing towards oil fields and a strategic military base, according to Kurdish and Iraqi officials.

The army captured several positions south of Kirkuk, including the North Gas Company station, a nearby processing plant and the industrial district south of the city, an Iraqi military statement said on Monday.

“Forces are continuing to advance,” it said.

An Iraqi Kurdish commander said the fighting with Kurdish forces caused “lots of casualties”.

Bahzad Ahmed said the Iraqi troops have “burnt lots of houses and killed many people” in Toz Khormato and Daquq, south of the disputed city.

The federal forces captured the K-1 military base south of Kirkuk, according to Iraq’s defence ministry.

Multi-pronged assault

“They attacked Peshmerga Forces from two fronts in the Taza-Kirkuk intersection and Maryam Bag bridge, both south of Kirkuk, using US military equipment, including Abrams tanks and Humvees,” the Kurdistan Region Security Council (KRSC) said in a statement.

“Significant forces have also been deployed to Maktab Khalid intersection in southwest Kirkuk as part of the operation,” the statement added.

The Kurdish forces said they destroyed at least five Humvees used by the Iraqi army.

“Peshmerga will continue to defend Kurdistan, its people and interests. This was an unprovoked attack following days of Iraqi military deployments to Kurdistan’s borders,” the KRSC statement said.

Iraqi forces/PMF now advancing from Taza in South of Kirkuk in a major op w/ intention to enter the city and takeover K1 base & oil fields.

— KR Security Council (@KRSCPress) October 15, 2017

Hemin Hawrami, senior assistant to Kurdish Regional Government (KRG) President Masoud Barzani, also said on Twitter that Peshmerga forces had been ordered “not to initiate any war, but if any advancing militia starts shooting”, then they had the “green light to use every power” to respond.

Al Jazeera’s Charles Stratford, reporting from Erbil, said Kurdish forces in and around Kirkuk “have vowed to defend it to the last man”. He added that the Kurdish governor of Kirkuk has reportedly called residents to arms, “saying anybody with a weapon should take it up and defend the city”.

Meanwhile, Iraqi state TV said that Prime Minister Haider al-Abadi gave orders to the security forces “to impose security in Kirkuk in cooperation with the population and the Peshmerga”.

The Iraqi army said the operation is being spearheaded by the 9th armoured division, the federal police and counterterrorism units, Stratford reported.

“They are saying that thousands of Shia militias are very much in a supportive role,” he said.

The launch of the operation followed a tense standoff between the two sides amid an escalating row in the wake of a controversial September 25 referendum on Kurdish secession.

“It seems as if all diplomatic efforts have failed,” said Stratford, calling the push a “very worrying” development.

“Despite repeated denials by the Iraqi army that they were going to move on into the city and retake these oil fields, it seems very much as if that is happening now.”

Rising tensions

Kurdish Peshmerga forces took control of oil-rich Kirkuk after the Iraqi army fled a major offensive by the Islamic State of Iraq and the Levant (ISIL, also known as ISIS) armed group in 2014.

Since then, there has not been an agreement between the KRG and the federal government in Baghdad about who should control the area – and also benefit from its vast oil wealth.

“Kirkuk is hugely important for the KRG and the Iraqi federal government,” said Stratford.

“It is one of the two main oil-producing areas of the country, believed to have around four percent of the world’s oil resources.” 

Tensions between the two sides have been running especially high since Iraqi Kurds overwhelmingly voted for secession in last month’s referendum that Baghdad rejected as illegal.

The non-binding poll was held in areas under the control of the KRG and in a handful of disputed territories, including Kirkuk.

Shortly after the referendum, the Iraqi parliament asked al-Abadi to send troops to Kirkuk and take back control of the region’s oil fields.

On Sunday, Kurdish leaders rejected a demand by Baghdad to cancel the outcome of the referendum as a precondition for talks to resolve the dispute. 

“So long as the Kurds were willing to remain within Iraq, who controls Kirkuk and the oil fields in Kirkuk was not as critical an issue,” Feisal Istrabadi, director of the Center for the Study of the Middle East at Indiana University, told Al Jazeera. 

“After the referendum, when there is talk of independence while there is a de facto Kurdish presence in Kirkuk, the stakes became much higher – and this, unfortunately, is the result,” he added, referring to the military operation.

READ MORE: A look into Iraq’s disputed Kirkuk

Kirkuk province lies outside of the official borders of the Kurds’ semi-autonomous territory. It is home to Kurds, Arabs, Turkmen and Christians.

The vast majority of Turkmen and Arabs who have lived in Kirkuk for generations boycotted the referendum. 

“There are many Kurds who call it their Jerusalem,” said Stratford, “but there’s also considerable opposition among the Arabs and the Turkmen about any idea with respect to Kirkuk being part of a future independent Kurdish state.”

Later in the day, the United States called on the Iraqi and Kurdish forces to avoid escalation and turn to dialogue to resolve their differences.

“We oppose violence from any party, and urge against destabilising actions that distract from the fight against ISIS and further undermine Iraq’s stability,” said Laura Seal, Pentagon spokeswoman.

“We continue to support a unified Iraq,” she added. “Despite the Kurdistan Regional Government’s unfortunate decision to pursue a unilateral referendum, dialogue remains the best option to defuse ongoing tensions and long-standing issues, in accordance with the Iraqi constitution.”

Seal also urged “all actors” in the region to focus on the common threat of ISIL and avoid stoking tensions among the Iraqi people. Iraqi and Kurdish forces have both been trained and armed by the US.