Iraq's government alleged on Friday that Iranian forces crossed into Iraq and seized an oil well just over the two countries' disputed border, prompting a protest from Baghdad and providing a dramatic display of the sometimes tenuous relations between the wary allies. The incident could trouble Iraq's drive to attract the international investment needed to develop its beleaguered oil sector, analysts said, and it raised questions about the two countries' ties, which had improved greatly after the fall of Saddam Hussein. According to Iraq's deputy foreign minister, Mohammed Haj Mahmoud, Iranian troops crossed into Iraqi territory on Thursday and seized oil well No. 4 in the Fakkah oil field, located in Maysan province about 320 kilometers southeast of Baghdad. The oil field is one of Iraq's largest. "This is not the first time that the Iranians have tried to prevent Iraqis from investing in oil fields in border areas," Mahmoud told the AP. He said he did not know if the Iranians were still in control of the well. Iraq's national security council held an emergency meeting Friday to discuss the issue, and government spokesman Ali al-Dabbagh later said the seizure showed anew the need for clearly defined borders between Iraq and Iran. He said the two countries have begun diplomatic talks. However, Dabbagh appeared careful to avoid describing the incident as a military incursion, saying the oil well takeover was carried out by a group of armed Iranians. "Iraq considers this penetration as a border breach and a violation of Iraq's sovereignty," he said in a statement. "We call upon the Iranian government to solve all the border disputes with Iraq through diplomatic means and to avoid the use of military force." Relations between the two countries have improved dramatically since the 2003 US-led invasion toppled Saddam, who in the '80s attacked Iran and started an almost decade-long war. Since Saddam's ouster, however, both countries have had Shi'ite-led governments, a rarity in the mostly Sunni Middle East. But their border remains in dispute. The Fakkah field is considered a shared field between Iran and Iraq, meaning both nations are able to pump oil from it, but the Iraqis consider oil well No. 4 theirs. Iranian soldiers carrying rifles seized the well Thursday night in a 25-car convoy and ordered the Iraqi workers to leave the area, according to a worker at the site who did not want to be identified for fear of retribution. The soldiers then mounted an Iranian flag inside the well, he said. There were no reports of violence during the incident, and Iranian forces left the well on Friday, leaving the flag behind, the worker said. His account could not be immediately confirmed. Analysts said it was too early to say whether the incident would mushroom into greater tension but said it could raise concerns with oil companies looking to invest in Iraq. Oil prices rose slightly after news of the incident. "It looks like some kind of warning shot, and it could definitely escalate into a big worry for oil companies," said Samuel Ciszuk of the London-based IHS Global Insight. In Washington, a US official said that although Iranians have crossed the border before, they had not previously ventured this far. Iraqi security forces were in the area, but there are no reports of fighting, he said on condition of anonymity because he was not authorized to speak on the record. The Iranians are believed to have left the area, he said. An official at the Iranian Embassy in Baghdad who did not want to be identified because he was not authorized to speak to media said reports of Iran seizing the well were "mere rumors." A message left for Iran's Foreign Ministry spokesman seeking comment was not returned. Iran's semiofficial Mehr news agency quoted officials at the National Iranian Oil Company as denying the incursion. Such incidents have happened before. Last year, the Iraqi Oil Ministry accused Iran of stealing oil from the Fakkah field and of illegally seizing and capping off wells in a second field Iraq says lies entirely within its territory. Iraq has an estimated 115 billion barrels of proven oil reserves - the world's third largest. But years of neglect, war and insurgency have left the oil fields severely underperforming. Iraq has been trying to attract international investment, including a round of international bidding last week. The incursion comes as Iraq is preparing for national elections on March 7, and in a research note, analysts at the Washington-based Eurasia Group said the incident could affect Iraq's domestic politics. Although Iraqi Prime Minister Nouri al-Maliki, a Shiite, has tried to present himself as a nationalist candidate with wide support, "...there remains the lingering perception that he is close to Teheran. If Iran appears to be acting against the interests of Iraq, some of Maliki's more nationalist and Sunni supporters, who harbor hostility toward Iran, could desert him," the note read. The Fakkah field, which has about 1.55 billion barrels of oil in reserves, was offered along with another two adjacent fields as a single group in Iraq's first postwar oil and gas bidding round in June. But the group received only one bid by a consortium grouping China's CNOOC Ltd. and Sinochem International Co. Ltd, which was rejected by the Oil Ministry.