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On Tuesday, Iraqi ministers considered a Cabinet report that said the suspension of exports, along with lower-than-expected levels of exports in months previous to April, equaled more than $3 billion in lost income.

“The Cabinet decided to give the Kurdistan regional government one week to come and defend themselves,” said Ali Mussawi, spokesman for Prime Minister Nouri al-Maliki. “If they do not, these funds will be cut from their budget.”

Kurdistan originally halted exports on April 1 over $1.5 billion it said was owed to foreign oil companies working in the region and that Baghdad allegedly had withheld.

Baghdad and Arbil are at odds over issues that include Kurdistan’s refusal to seek approval from Baghdad for oil contracts it has awarded to foreign firms and over a swath of disputed territory in northern Iraq.

The central government says all oil deals must go through the federal oil ministry, and it regards as illegal any that do not.

From wire dispatches and staff reports