Tuesday's judgement by the federal supreme court was the latest salvo in a years-old battle for control of the region's oil earnings.

"This decision by the federal supreme court is unjust, unconstitutional and violates the rights and constitutional authorities of the Kurdistan region," the regional government said in a statement late Tuesday.

"The Kurdistan regional government will not forfeit the rights of the Kurdistan region as codified in the Iraqi constitution, and will continue its attempts to reach a constitutional solution with the federal government on this matter."

Iraq's federal government has fought to regain control of output from oilfields in the Kurdistan region ever since its autonomous government began marketing it independently more than a decade ago, signing its own contracts with customers.

Ankara's role in providing an export outlet for the oil has triggered long-running tensions with Baghdad.

Under the current deal between the federal and regional governments, the Kurdish region delivers 250,000 barrels per day of its more than 400,000 bpd output to Baghdad, in return for a share of federal funds.

The money is used to pay the salaries of Kurdish civil servants and peshmerga fighters.

Following the Islamic State group's seizure of swathes of northern and western Iraq in 2014, the Kurds took control of the lucrative oil fields around Kirkuk.

But when they moved to hold a referendum on independence in 2017, federal troops took most of them back in a major blow to Kurdish revenues.

The Kurdish government promised clients their contracts would be honoured despite the latest legal tussle with Baghdad.

"The Kurdistan regional government will take all constitutional, legal and judicial measures to protect and preserve all contracts made in the oil and gas sector," its statement said.