Since the fall of Saddam Hussein, consecutive governments have failed to solve the ethnic crisis in the city of Kirkuk, and last year's failed northern Iraq independence referendum has not improved the situation.
Iraq's parliament on Saturday adopted an $88.5 billion budget for 2018, with Kurdish lawmakers boycotting the vote to protest against a cut in the amount allocated to their autonomous region.
Deal comes after Iraqi government forces take back the oil fields under the KRG's Peshmerga forces, who had occupied Kirkuk in 2014 to prevent the city from falling to Daesh.
The ongoing conflict in Iraq has displaced millions of people and destroyed much of what they had left behind.
Kurds in northern Iraq voted overwhelmingly for administrative independence in a referendum in September, defying the central government in Baghdad. Iraq's supreme court ruled that no Iraqi province could secede.
Iraqi Prime minister Haider al Abadi urges the country's northern semi-autonomous Kurdish region to abide by the court ruling.
Stepping down after 12 years in office, Masoud Barzani leaves behind a region in flux following his decision to hold a referendum on administrative independence for the KRG.
The Ibrahim Khalil crossing is a vital supply route for northern Iraq's Kurdish Regional Government from Turkey.
Barzani sent a letter to the KRG parliament asking to distribute his powers among the regional government.
Baghdad 's seizure of Kirkuk and swathes of northern Iraq has left the Kurds defeated, divided and displaced.
The non-binding referendum for independence held by the Kurdish Regional Government in Iraq's northern region resulted in an overwhelming "yes" vote, despite objections from many states.
After being asked to leave all the disputed areas last Monday, some Kurdish Peshmerga soldiers have returned to territory the Iraqi army has not yet reclaimed. Clashes between Peshmerga fighters and Iraqi forces have since ensued.
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