Baghdad in April declared a Kurdish deal with U.S. supermajor Exxon frozen because of legal issues with oil contracts in the country. Exxon was blacklisted by the central government for its action.
Sami al-Askari, a member of the Iraqi Parliament close to Prime Minister Nouri al-Maliki, was quoted by The Washington Post as saying Exxon would "face the Iraqi army" should it lay "a finger" on contested border regions in northern Iraq.
The government in Baghdad and the semiautonomous Kurdish government in the north have squared off over the so-called disputed territories, which spread from northeastern Ninawa province to the western border with Iran.
Tensions over oil legislation in the country have frustrated Iraq's oil ambitions.
Askari said he didn't want war but would consider force to defend oil and sovereignty. Former Oil Minister and Deputy Prime Minister Hussain al-Shahristani said it's Baghdad's obligation to defend the country's sovereignty. He advised Exxon against working in the north.
"They would be committing a grave mistake," he told the newspaper.
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