A day after a cut in foreign air links with the region, Iran's state broadcaster said all transport companies and drivers have been ordered to stop carrying fuel products between Iran and Iraqi Kurdistan "until further notice".
Diesel is one of Iran's main exports to the Kurdish region, mainly for power plants and vehicles, while the Kurds almost exclusively rely on crude and fuel oil exports to raise revenues for their oil-rich region.
Iraqi Kurds overwhelmingly voted for independence in Monday's non-binding referendum, which has sent regional tensions soaring.
Tehran, which strongly opposes independence for the Iraqi Kurds, fearing it will provoke separatists among its own Kurdish population, also announced a joint military exercise with Iraq in response to the referendum.
"A joint military exercise between Iran's armed forces and units from the Iraqi army will be held in the coming days along the shared border," Iranian armed forces spokesman Masoud Jazayeri told reporters in Tehran.
The drills will take place at several crossings on Iran's border with Iraqi Kurdistan, he said, speaking after a high-level meeting of Iranian commanders.
He said "necessary decisions were taken to provide security at the borders and welcome Iraq's central government forces to take position at border crossings".
Turkish measures
Tehran has accepted a request by Baghdad for an Iraqi army presence at frontier crossings.
After the ban on international flights to and from Iraqi Kurdistan was enforced on Friday, the Kurdish region in the north is dependent on its border posts for trade and contact with the outside world that bypasses the rest of Iraq.
Northern neighbour Turkey also strongly opposed the vote.
Turkish President Recep Tayyip Erdogan said Saturday in a televised speech that Ankara had been saddened to see some Iraqi Kurds celebrating the independence referendum with Israeli flags.
"This shows one thing, that this administration (in northern Iraq) has a history with (Israel's intelligence agency) Mossad, they are hand-in-hand together," Erdogan said.
Fearing like Iran that it would inflame the separatist aspirations of its own Kurdish population, Ankara has threatened measures including blocking lifeline oil exports from the region via Turkey.
Washington, another critic, said it did not recognise the "unilateral" referendum and urged dialogue and a rejection of the use of force.
"The vote and the results lack legitimacy and we continue to support a united, federal, democratic and prosperous Iraq," US Secretary of State Rex Tillerson said Friday.
Baghdad ordered the halt to all foreign flights to and from the Kurdish region from 6:00 pm (1500 GMT) Friday.
Foreigners scrambled to leave regional capital Arbil and second largest city Sulaimaniyah before the ban took effect.
Arriz Abdallah, head of the Patriotic Union of Kurdistan faction in the Iraqi Kurdish parliament, told AFP that "ordinary people will pay the price" of the "violent reactions" from Baghdad and neighbouring states.
Key gateway
Iraqi Kurdish transport minister Mawlud Bawa Murad has said the flight ban would "negatively impact all international businesses in the Kurdistan region, in addition to all civilians, from all nations".
It would "negatively impact our daily life," he said.
Arbil airport director Talar Faiq Salih has said humanitarian, military and diplomatic flights were excluded from the ban, as well as domestic flights.
Arbil is a key gateway for humanitarian aid workers helping Iraqis affected by the battle against the Islamic State group (IS).
Washington had said it would be willing to facilitate talks between the Iraqi Kurdish authorities and Baghdad to calm escalating tensions over the 92-percent "yes" vote.
The Kurds, whose borders with Turkey, Iran and Syria remain open, have condemned the flight suspension as "collective punishment".
Iraq's Prime Minister Haider al-Abadi said it was not "punishment" but a legal measure that would be reversed if the transport authority was transferred to Baghdad in line with Iraq's constitution.
On Thursday, the spokesman for the international coalition fighting IS in Iraq and neighbouring Syria said the referendum had taken focus away from the war against the jihadists.
French President Emmanuel Macron invited Abadi to visit Paris on October 5 to discuss the referendum.
"Faced with the priority of fighting Daesh and the stabilisation of Iraq, Iraqis must remain united," the French presidency said in a statement, using another name for IS.
Iraqi security forces meanwhile have assaulted the northern town of Hawija, one of the last IS bastions in the country along with a stretch of the Euphrates Valley near the border with Syria.
Kurdish forces have been key allies in US-backed offensives against IS in both Syria and Iraq.
