(CNN) Two armies funded and trained by the United States have faced off in northern Iraq, in a confrontation that, while seemingly over for now, could have lasting consequences for the future of the country and the broader Middle East.

The Iraqi Security Forces and pro-Iranian Shia militia took direct control of the oil-rich city of Kirkuk on Monday after being ordered to seize infrastructure that had been under Kurdish control. The forces entered the disputed city and set up checkpoints around its perimeter, while witnesses saw a sole Iraqi flag flying atop the governor's headquarters. The building usually holds both the Kurdish and Iraqi flags.

This confrontation always seemed likely, even inevitable. Not only does Kirkuk sit on one of Iraq's main ethnic and sectarian fault lines; it's also surrounded by some of the country's most valuable oil fields.

Referendum upped the stakes

The stakes were raised last month when the Kurdish leadership held an independence referendum in the face of international criticism and deep hostility from Baghdad. The decision to extend the vote to disputed areas such as Kirkuk, outside Iraqi Kurdistan's accepted borders, made a bad situation worse.

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