BAGHDAD/KIRKUK, Oct 17 (Reuters) - The Baghdad government recaptured territory across the breadth of northern Iraq from Kurds on Tuesday, widening a sudden and dramatic campaign that has shifted the balance of power in the country almost overnight.
In the second day of a lightning government campaign to take back towns and countryside from forces of the Kurdish autonomous region, Kurdish troops known as Peshmerga pulled out of the long disputed Khanaqin area near the Iranian border.
Government troops took control of the last two oil fields in the vicinity of Kirkuk, a city of 1 million people that the Peshmerga abandoned on Monday in the face of the government advance. A Yazidi group allied to Baghdad also took control of the town of Sinjar.
The government advances have redrawn the map of northern Iraq, rolling back gains by the Kurds who infuriated Baghdad last month by holding a referendum on independence.
The Kurds govern three mountainous northern provinces of Iraq in an autonomous region, and have also held a wide crescent of additional territory in northern Iraq, much of which they captured after helping drive out Islamic State fighters.
Prime Minister Haidar Abadi ordered his troops on Monday to raise their flag over all Kurdish-held territory outside the autonomous region itself. They achieved a swift victory in Kirkuk, reaching the centre of the city in less than a day.
The fighting in one of Iraq’s main oil-producing areas, has helped return a risk premium to oil prices. After months of range-bound trading, benchmark Brent crude is now above $58 a barrel, up almost a third from its mid-year levels.
The advances create a dilemma for Washington, which is close allies of both Baghdad and the Kurds, and has armed and trained both sides as part of its successful campaign to drive Islamic State fighters out of Iraq.
“We don’t like the fact that they’re clashing. We’re not taking sides,” President Donald Trump told reporters at the White House on Monday. “We’ve had for many years a very good relationship with the Kurds as you know and we’ve also been on the side of Iraq.”
So far most of the advances appear to have come unopposed, with Kurds withdrawing before government forces move in. There have been reports of just one major clash, in the early hours of Monday on the outskirts of Kirkuk, which Washington described as a misunderstanding.
In Kirkuk, one of Iraq’s most diverse cities, members of the Turkmen ethnic group who have opposed Kurdish rule had celebrated on Monday, driving through the streets in convoys and firing weapons in the air. Some Kurdish civilians fled.
For the Kurds, the loss of territory, particularly Kirkuk which Kurdish folklore views as the heart of their homeland, is a severe blow just three weeks after they voted to declare their decades-old objective of an independent state.
The setbacks have led to sharp accusations among the two main Kurdish political parties, which each control separate units of Peshmerga fighters.
Officials in the KDP of Kurdish regional government leader Masoud Barzani accused the PUK of his longterm rival Jalal Talabani of “treason” for abandoning Kirkuk. The widow of Talabani, who served as ceremonial Iraqi president in Baghdad from 2003-2014 and died two weeks ago, denied blame. Talabani said her party tried, but failed, to make the Iraqi government renounce the '‘plan to attack‘’ Kirkuk through contacts with U.S. and Iraqi government representatives.
Rudaw TV, one of the main Kurdish stations, said Barzani would soon make a statement calling on the Kurdish factions to avoid “civil war”.
The advances by government forces provide a major political boost for Abadi, the Iraqi prime minister, who had faced threats from Iran-backed Shi‘ite armed groups to take matters into their own hands if he did not act swiftly to take on the Kurds.
Oil officials in Baghdad said all the oil fields near Kirkuk were working normally on Tuesday after the last of them came under government control. Kirkuk is the base of Iraq’s Northern Oil Company, one of the two giant state oil firms that provide nearly all government revenue.
Iraqi forces raised their flag over the provincial government headquarters in Kirkuk on Monday afternoon after sweeping into the city from the south and west.
In Sinjar, home to the small Yazidi religious minority that faced genocide in 2014 when the area was captured by Islamic State fighters, a Yazidi group called Lalesh took control of the town after Kurdish Peshmerga withdrew.
“There was no violence. The Lalesh group moved after the Peshmerga pulled out,” said a resident reached by telephone.
The decision by the Kurds to hold an independence referendum angered neighbours Turkey and Iran. Washington, which has been friendly to the Kurds for decades, had also called on them to cancel the vote, fearing that it could trigger another war that might break up Iraq and drag in its neighbours. (Additional reporting by Maher Chmaytelli; writing by Peter Graff; Editing by Richard Balmforth)