Iraq's deputy interior minister denied on Friday reports that Iranian troops had crossed into Iraqi territory and briefly occupied a remote oilfield area.
An Iraqi security source in southeastern Maysan province, speaking on condition of anonymity, said Iranian troops made their way on Thursday onto the Fakka oilfield area, located just on the Iraqi side of the long desert border of two countries, then withdrew after several hours.
Iraq's deputy interior minister Ahmed Ali al-Khafaji said no incursion took place.
"This news is not true. This field is disputed and now it is neglected by both sides. There was no storming of the field, it's empty, it's abandoned, it is exactly on the border between Iraq and Iran," he said.
US crude for January delivery hit a high of $74.32 on the reports, before falling back.
According to Arabic-language television reports, Iranian troops entered the Iraqi field and raised an Iranian flag. Ties between Iran and Iraq, which fought a bloody eight-year war in the 1980s, have improved since a Shi'ite-led government took over in Baghdad following the ousting of Sunni Arab leader Saddam Hussein in 2003.
Yet tensions have flared in the past in the inhospitable desert region, just one of many flashpoints where continuing disagreement over shared borders between the majority Shi'ite Muslim neighbours has fuelled a low-level public feud.
With Washington and Tehran at odds over Iran''s nuclear programme, the Iran-Iraq relationship is more delicate given the presence of 115,000 US soldiers on Iraqi soil.
Oil reserves
A source in the Iranian embassy in Baghdad said he had no information about such an event.
"If such a thing had happened, they would have told us," he said, referring to the Iranian government in Tehran.
Iraqi interior minister Jawad al-Bolani, speaking on al-Arabiya television, said the Iraqi government would make an additional statement on events at Fakka.
"Iraq will not give up its oil wealth, no matter the reason," he told the news channel. He did not say when the government might make the statement.
Iraqi government spokesman Ali al-Dabbagh said ministers would meet this evening on the issue and would make a statement following their discussion.
Together with Bazargan and Abu Gharab, Fakka makes up the so-called Maysan Fields that have an estimated 2.463 billion barrels of reserves.
According the Oil Ministry, oil production in the Fakka area began in the 1970s but was suspended during the Iran-Iraq war. The closest city is Amara, some 300 km (185 miles) southeast of Baghdad.
Iraq offered the Maysan oilfield complex to global energy firms in a development contract auction in June, its first since the 2003 invasion.
