Kurdish–Arab tensions in Iraq have escalated in recent months as a result of outstanding disputes between the Kurdistan Regional Government (KRG) and the Shi’ite-dominated government in Baghdad.
The two governments are yet to settle an array of disputes related to power-sharing and disputed territories . The latest and current dispute is centered on the energy sector and the Kurds’ right to explore and export its hydrocarbons independently of Baghdad. 
The KRG insists that it manages its energy sector independently of the Baghdad government and maintains it has every right to export its own oil, as well as manage revenues from the exports, because the Iraqi constitution gives it the right to do so. This is disputed by the Baghdad government, which contests Kurdistan’s right to unilaterally export oil to Turkey (via a recently established pipeline)  and maintains that the Kurds must let the State Oil Marketing Organization (SOMO) handle the revenues.
Thus far, the Kurds have only proposed that SOMO acts as an observer. In response to the Kurdish position, Baghdad has withdrawn the Kurds’ 17 percent of the Iraqi national budget, which Kurdish President Massoud Barzani has called an action tantamount to “a declaration of war.” The withdrawal of Kurdish access to the budget has put increased financial pressure on the KRG , which has turned to the private sector for financial loans as it struggles to pay the salaries of Kurdish civil servants.
While President Barzani may consider Baghdad’s position as constituting a declaration of war, armed confrontation between the Iraqi and Kurdish armed forces is unlikely. Armed conflict should not be dismissed altogether, given the history of Kurdish–Arab tensions and conflict in the modern Iraqi state. It is, however, very unlikely, principally because Baghdad’s Shi’ite-dominated government continues to battle with Sunni Arab militants in Anbar.
The Peshmerga, the armed forces in the Kurdish region, and the Iraqi military have come close to exchanging blows in the past but conflict would be costly for all sides involved. The Kurds also have extensive ties with some of Iraq’s most powerful Shi’a movements, who are unlikely to support any armed confrontation with the Kurds. The Kurds and the current ruling Shi’ite elite fought alongside each other against the Ba’ath regime. Nonetheless, small and localized skirmishes should not be ruled out, even if these are unlikely to escalate into a broader conflict.
Politically, Prime Minister Nuri Al-Maliki cannot risk isolating himself from the Kurds so close to parliamentary elections, which are scheduled to take place in April, especially as he has already alienated his Shi’ite and Sunni rivals and may be dependant on the Kurds for a third-term in office.
The elections themselves are perhaps why tensions have escalated so rapidly. Similar escalations have taken place in the past, in anticipation of elections, since it bolsters Maliki’s credentials as a nationalistic leader, and since anti-Kurdish sentiments are high in Iraq. In targeting the Kurds, Maliki plays on these sentiments. Similarly, an assertive Baghdad helps mobilize Kurdish support for the Kurdish leadership and the Kurdish nationalistic cause.