The United States expressed "concern" but said Washington wouldn't take sides as Iraqi government forces took over key assets in the oil-rich city of Kirkuk from Kurdish authorities on October 16.
"We're not taking sides, but we don't like the fact that they're clashing," U.S. President Donald Trump told journalists in Washington. "We've had for many years a very good relationship with the Kurds."
"We've also been on the side of Iraq," he added, "but we're not taking sides in that battle."
Trump spoke after Iraqi troops and tanks swept across the northern province, capturing oil and military sites from the Kurds and seizing the governor's office in Kirkuk city.
It was the first major clash between government forces and Kurdish Peshmerga since the region was rocked by an overwhelming vote for Kurdish independence in a referendum held in Iraqi's Kurdish autonomous region and surrounding areas, including Kirkuk, last month.
Kurdish officials said residents of Kirkuk voted strongly for independence in the referendum, which Baghdad rejected as illegal.
Iraqi Prime Minister Haidar al-Abadi said the operation to retake control of Kirkuk, which Kurdish officials said caused "lots of casualties," was necessary to "protect the unity of the country." He called on the citizens of Kirkuk to cooperate with "our heroic armed forces."
U.S. State Department spokeswoman Heather Nauert said the United States is "very concerned" by the violence and urged "all parties to avoid provocations that can be exploited by Iraq's enemies who are interested in fueling ethnic and sectarian conflict."
The United States supports "the peaceful exercise of joint administration by the central and regional governments, consistent with the Iraqi Constitution, in all disputed areas," she said.
Pentagon officials said they are urging both sides to avoid any escalation of the conflict. Washington has armed and trained both Iraqi government forces and Peshmerga fighters to wage war against Islamic State militants in northern Iraq.
"We oppose violence from any party and urge against destabilizing actions that distract from the fight against [Islamic State]," Pentagon spokesman Robert Manning said.
Federica Mogherini, the European Union's chief diplomat, urged both sides "to seek dialogue in order to preserve Iraq's unity and long-term stability."
After clashes with Peshmerga forces overnight, Iraqi forces early on October 16 entered the disputed city and took control of the provincial council’s headquarters and key installations outside the disputed city, reports said.
Kirkuk residents told Reuters that Iraqi forces removed the Kurdish flag that was hoisted on the governorate building in April next to an Iraqi flag. They said that only the Iraqi flag was now flying.
Amid the clashes, thousands of Kurdish residents reportedly fled the city, with some citing fear of reprisals against Kurds.
Meanwhile, crowds of Turkmen celebrated, with some driving in convoys with Iraqi flags and firing shots in the air.
The Iraqi army said on October 16 that government troops have moved toward Kurdish-held sites in the northern province of Kirkuk, capturing several installations from Kurdish fighters.
The military said that pro-government forces took control of roads and infrastructure, including a military base, an airport, and an oil field near the disputed city of Kirkuk.
A spokesman for Kurdish forces, Brigadier General Bahzad Ahmed, confirmed that federal forces seized industrial areas south of Kirkuk in fighting that caused "lots of casualties."
Crisis talks on October 15 failed to resolve the standoff as Kurdish leaders refused demands by the Bagdad government to reject the referendum result.
Kurdish Peshmerga forces took control of much of Kirkuk Province in 2014, when militants from the extremist group Islamic State (IS) swept across northern Iraq.
With reporting by AFP, dpa, Reuters, AP, and the BBC