Kurdish Peshmerga fighters rejected a warning from an Iraqi paramilitary force to withdraw from a strategic junction south of Kirkuk, which controls the access to some of the region's main oilfields, a Kurdish security official said on Sunday.
Meanwhile, an Iranian military official arrived in Iraq's Kurdistan region for talks on the growing crisis between the Kurdish authorities and the Iraqi government following last month's Kurdish independence referendum.
Major General Qassem Soleimani is the commander of foreign operations for Iran's elite Revolutionary Guards who provide training and guns to Iraqi paramilitary groups backing the Shia-led government in Baghdad, known as Popular Mobilisation.
The top Kurdish leadership met on Sunday to discuss the crisis and rejected the Iraqi government's demand that it cancels the outcome of the independence referendum as a precondition for talks to resolve the dispute.
The vote delivered an overwhelming 'Yes' for independence.
The meeting was attended by Kurdistan Regional Government President Masoud Barzani, Iraqi President Fuad Masum, a Kurd who hold a largely ceremonial position in the Iraqi federal state, and Hero Talabani, the widow of Kurdish leader Jalal Talabani who died this month, a Barzani aide said.
They rejected what they described as "military threats" and pledged to defend Kurdish-held territory in case of an attack.
Popular Mobilisation had given the Peshmerga until midnight local time (2100 GMT Saturday) to leave a position north of the Maktab Khalid junction, a security official from the Kurdistan Regional Government said.
Ali al-Hussaini, a spokesman for the paramilitary groups known as Hashid Shaabi in Arabic, told Reuters the deadline had expired without giving indications about their next move. "We are waiting for new orders. No extension is expected," he said.
The Kurdish position north of the junction controls the access to an important airbase and Bai Hassan, one of the region's main crude oil fields, the KRG official said.
The city, the airbase and their immediate surroundings, including the oilfields, are under Kurdish control.
There were no clashes reported 17 hours after the deadline but tension remained high with both sides mobilised.
Kurds see Iraqi "Threats"
The Kurdistan Regional Government (KRG) and the Shi'ite-led central government in Baghdad are at loggerheads since the Sept. 25 vote and its loud call for Kurdish independence.
Kurdish authorities said on Friday they had sent thousands more troops to Kirkuk to confront Iraqi "threats." Iraqi Prime Minister Haider al-Abadi has repeatedly denied any plans to attack the Kurds.
Popular Mobilisation is a separate force from the regular army and officially reports to Abadi. It is deployed alongside the army south and west of Kirkuk.
Kirkuk, a city of more than one million people, lies just outside KRG territory but Peshmerga forces were stationed there in 2014 when Iraqi security forces collapsed in the face of an Islamic State group onslaught. The Peshmerga deployment prevented Kirkuk's oilfields from falling into jihadist hands.
The Baghdad central government has taken a series of steps to isolate the autonomous Kurdish region since its vote for independence, including banning international flights in and out.
Baghdad's tough line, ruling out talks sought by the Kurds unless they renounce the breakaway move, is backed by neighbours Turkey and Iran - both with their own sizeable Kurdish minorities, and in Turkey's case, a long-running Kurdish insurgency.
In Washington, U.S. Defense Secretary Jim Mattis said on Friday the situation had the full attention of the United States, which was working to ensure it does not escalate.
The United States has taken the side of the Iraqi government in refusing to recognize the validity of the referendum.