Baghdad has set a pre-dawn Sunday deadline for Kurdish forces to abandon positions in the disputed oil province of Kirkuk they took during the fightback against ISIS more than three years ago, a senior Kurdish official said.
"The deadline set for the peshmerga to return to their pre-June 6, 2014 positions will expire during the night," the Kurdish official told AFP.
Asked at what time, he said 2 am on Sunday (2300 GMT Saturday).
The alleged ultimatum comes as thousands of Iraqi troops and the Popular Mobilization Forces are locked in an armed standoff with Kurdish peshmerga fighters near ethnically divided but historically Kurdish-majority Kirkuk.
Tensions have soared between the erstwhile allies in the war against ISIS since a Kurdish vote for independence last month.
Tens of thousands of peshmerga soldiers have been stationed in and around Kirkuk for some time and another 6,000 have arrived since Thursday, Kosrat Rasul, vice president in the Kurdistan Regional Government (KRG), has said.
The KRG's Security Council expressed alarm late on Thursday at what it called a significant Iraqi military buildup south of Kirkuk, "including tanks, artillery, Humvees and mortars."
Kurdish security sources later said that the Peshmerga had shifted their defense lines by 3 km to 10 km south of Kirkuk to reduce the risk of clashes with Iraqi forces, which then moved into some of the vacated positions, including in Taza Khurmatu, without incident.
Also Saturday, Iraqi President Fuad Masum, who is himself a Kurd, held urgent talks with Kurdish leaders in the city of Sulaimaniyah in the south of the autonomous Kurdish region.
In June 2014, ISIS militants swept through vast areas north and west of Baghdad, prompting many Iraqi army units to disintegrate and Kurdish forces to step in.
They did so primarily in historically Kurdish-majority areas they had long sought to incorporate in their three-province autonomous region in the north against the strong opposition of Baghdad.
The Kurds currently control the city of Kirkuk and three major oil fields in the province which account for a significant share of the regional government's oil revenues.
In Washington, Defense Secretary Jim Mattis said on Friday that the US was working to reduce tensions between Iraqi federal and Kurdish forces, urging them to remain focused on the war against terrorists.
"We are trying to tone everything down and to figure out how we go forward without losing sight of the enemy, and at the same time recognizing that we have got to find a way to move forward," he told reporters.
"Everybody stay focused on defeating ISIS. We can't turn on each other right now. We don't want to go to a shooting situation," he added.