Kurdistan's president, Massoud Barzani, warned Maliki that his actions are "a declaration of war against the people of Kurdistan."
The simmering feud between the autocratically inclined Maliki and the independence-minded Kurds seems set to escalate sharply.
But Maliki is facing a potentially explosive parliamentary election on April 30, the first since U.S. military forces withdrew in December 2011.
He hopes it will bring him a third term as premier, while battling a widening insurgency by the minority Sunnis and al-Qaida that many in Baghdad fear will eventually spread to Iraq's all-important oil industry, which is largely in the Shiite-controlled south.
Some political analysts see the distinct possibility of a compromise in the coming weeks -- Maliki making some concessions to the Kurdish Regional Government on the oil issue in return for Kurdish support at the polls, on which he had to depend in previous elections.
"I expect that somewhere around the election, either just before or just after, Baghdad will grudgingly agree to allow the KRG to manage its own oil exports, with some sort of revenue-sharing arrangement," Richard Mallison, a geopolitical analyst and Iraq specialist with Energy Aspects of London, told The National newspaper, a daily published in the United Arab Emirates.
Maliki's Shiite-dominated parliamentary bloc failed to secure a majority in the 2010 election for the 325-seat Parliament and it was only an eventual alliance with the Kurds that put his State of Law coalition back in power.
After the U.S. withdrawal, Maliki accelerated the process of amassing power in his own hands -- the army, security services the supreme court, the treasury, central bank and state media.
By the spring of 2012, the Kurdish parties and the allies of Shiite cleric Moqtada al-Sadr, scion of an illustrious family and Maliki's main rival, attempted a parliamentary vote of no confidence in the Iraqi premier.
"The effort narrowly failed due to strenuous Iranian lobbying on Maliki's behalf, but it became clear that he would face a major challenge in securing a third term in 2014," Iraq specialist Michael Knights of the Washington Institute for Near East Policy told the BBC.
"Maliki is perhaps unique in being able to boast the U.S. and Iran as his closest backers. Both have stepped into Iraq's political melee to save him from removal on numerous occasions since 2006," when he was first elected.
All this makes the swelling confrontation between Maliki's regime and the KRG, which if not yet independent sometimes acts like it is, a political time bomb.
And lurking behind the confrontation is the concern that if the KRG becomes economically self-sufficient because of the estimated 45 billion barrels of oil it says it sits on, can Kurdish independence be far behind?
The Kurds' move in January to start pumping their oil directly to northern neighbor Turkey via a Turkish-built pipeline to the export terminal at Ceyhan on the Mediterranean coast, in open defiance of Baghdad, elevated the dispute to a potentially dangerous level.
Maliki, who insists the Kurdish move is illegal and unconstitutional, cannot be seen to let the Kurds get away with such unilateral actions.
Right now the Kurds are pumping a modest 200,000 bpd to Turkey. By the end of the year they hope to double that, pushing it up to 2 million in the next few years, bypassing Iraq's state exporting network.
The Kurds say they are willing to give Baghdad the greater share of this revenue. But Maliki's government wants control.
Now Maliki has retaliated by blocking Erbil's share of the Iraqi state budget. Under the constitution Kurdistan is entitled to 17 percent of the Iraqi budget, which is used to pay government salaries and the like. But the Kurds claim Baghdad has rarely ever provided more than 10 percent.
Kurdish Prime Minister Bechirvan Barzani, the KRG president's nephew, says he's willing to negotiate everything -- except the budget cut.
Maliki's ban this week on the two airlines, Germani and Hormuz -- Baghdad has control of all Iraqi air space -- is seen as another means of pressuring the Kurds.