Iraq Attacks Key Northern Oil City, Reports Its Recapture From Kurds : Civil war: Kirkuk was the major prize of the insurgency. Its loss could turn the tide against the rebels.

Loyalist legions of President Saddam Hussein’s army Thursday launched a counteroffensive against the northern oil city of Kirkuk, overrun last week by Kurdish guerrillas, and quickly recaptured the northern oil center, Baghdad Radio reported.

Kirkuk is the key prize of the Kurdish insurgency that flowed out of the northern mountains on the heels of Hussein’s disastrous military defeat in Kuwait. The city’s loss could turn the tide against the insurgency in the north.

The official Iraqi News Agency said government forces “completely and totally purged the city of agents and the elements of sabotage before noon.”

Kurdish rebel sources in Damascus, Syria, said that they could not confirm that Kirkuk had fallen but said the Baghdad report seemed to be true, Reuters news agency reported. The sources said rebels might have pulled out to halt the loss of civilian life.

In London, a Kurdish representative said the city came under attack Thursday morning, 24 hours after reports from inside Iraq said the army was gathering a large force with heavy weapons to retake it.

“Iraq has started a massive offensive, a massive bombardment on the city of Kirkuk by air, ground forces and missiles,” said Hoshyar Zebari of the Kurdish Democratic Party. In bombarding one of its own cities, the Iraqi army employed the ruthless tactics used to put down insurgencies of the Shiite Muslim towns of the south.

The government had not previously conceded that Kirkuk, a key economic center, had fallen into rebel hands. Petroleum facilities in the Kirkuk area produced more than a third of Iraq’s oil exports before the invasion of Kuwait. When the Kurds, the dominant ethnic group in northern Iraq, seized the city from Hussein’s reeling forces last Tuesday, rebel spokesmen claimed that government control in the north had been quashed, except for Mosul, Iraq’s third-largest city.

Early this week, Kurdish exile leader Jalal Talabani crossed the Syrian border and entered the town of Zakhu to a tumultuous welcome. He claimed that all of Kurdistan was in rebel hands. But the situation has changed rapidly in the past 48 hours.

Western reporters in Zakhu said government artillery was pounding Dahuk, a town midway between Mosul and Zakhu, and the entire region along the Turkish and Syrian borders appeared under threat. Late Thursday, the Iraqi News Agency reported that Dahuk was back in government hands. “Life has returned to normal there after the symbols of agentry, crime and treachery tried to rape it,” the INA report said.

There was no independent confirmation of the government claim, but the U.S. State Department confirmed that loyalist forces had begun a major assault to recapture Kirkuk.

“Government forces were employing tanks, heavy artillery, helicopter gunships and probably multiple rocket launchers,” Department spokesman Richard Boucher said in Washington. “Buildings and other facilities inside Kirkuk had already suffered significant damage during the first hours of the assault.

“Elsewhere in northern Iraq, clashes continue between government forces and dissident elements east and southeast of Mosul,” Boucher added. “The government has recently sent additional reinforcements to Mosul. We cannot confirm government claims that its forces have retaken the town of Dahuk northeast of Mosul.

“In the south, we can confirm at this point only one major clash early (Thursday) took place in the lower Euphrates Valley in which the government forces used artillery against the dissidents,” he said.

Elsewhere, a surprising report came from Shiite sources in Damascus who told Reuters that the city of Karbala south of Baghdad had been retaken by rebels. “Popular forces have recaptured the holy city of Karbala and all areas around it after fierce fighting with government troops,” Reuters quoted a spokesman for the Muslim rebel Al Dawaa party as saying.

Reports from inside and outside Iraq over the past few days have indicated that Hussein’s loyalists had broken the back of the Shiite rebellion in the south, including the uprisings in the holy cities of Karbala and Najaf, at a heavy cost in lives. Refugees reaching American military lines in southern Iraq related accounts of brutal attacks by government artillery and helicopters, followed up by peremptory executions of suspected rebels.

But in the north, Kurdish spokesmen had been riding a tide of optimism. News film from Zakhu showed guerrillas training on antiaircraft guns that appeared to be still partially wrapped in packing paper. Talabani claimed that a Kurdish advance had captured an airfield and that the Kurds had a two-plane air force, one antiquated MIG-21 fighter and a Sukhoi bomber, Soviet-made aircraft sold to Hussein’s military.

Kirkuk, however, was exposed between government forces based in Mosul and Baghdad. When Hussein mustered those forces, they apparently were too much for the lightly armed rebel units. “Saddam is using his jets against Kirkuk,” Kurdish spokesman Zebari had reported. “If he’s prevented from using jets, we have a chance.”

Kurds apparently still have a strong grip on the northeast, including the key cities of Sulaymaniyah and Arbil, but Hussein’s resurgent forces are pushing against Kurdish lines from the southwest. Meanwhile, supply lines from Syria were being shelled by government artillery, Kurdish spokesmen said.

“The food situation is very serious,” said Talabani, the Kurdish leader in Zakhu. “We will face starvation if we don’t receive supplies within one month.” He said he has asked officials of the American-led coalition that defeated Iraqi forces in Kuwait to allow food for the rebels to cross the Syrian, Iranian and Turkish borders.

“Instead of punishing Saddam, the embargo is punishing the people fighting to overthrow him,” Ahmed Barmani, a Talabani aide, complained in Zakhu.

Food, meanwhile, was the subject of a shockingly critical editorial in Thursday’s editions of Al Thawra, the newspaper of Iraq’s ruling Baath party in Baghdad. Columnist Mohammed Jazaeiri accused unidentified government officials of holding up the cost and availability of food in the capital by playing the black market.

“Products distributed by the government are turning up on the black market for 10 times more than the official price, under the eyes and ears, if not the collaboration, of the protectors,” he wrote.

Times staff writer Norman Kempster in Washington contributed to this article.