Sunni rebels from an Al-Qaeda splinter group overran the Iraqi city of Tikrit, Saddam Hussein's home town, on Wednesday and closed in on the biggest oil refinery in the country, making further gains in their rapid military advance against the Shiite-led government.
The threat to the Baiji refinery comes after militants from the Islamic State in Iraq and the Levant (ISIL) seized the northern city of Mosul, advancing their aim of creating a Sunni caliphate straddling the border between Iraq and Syria.
The fall of Mosul, Iraq's second biggest city, is a blow to Prime Minister Nuri Al-Maliki's attempts to defeat the Sunni militants, who have regained territory in Iraq over the past year following the withdrawal of US forces, seizing Falluja and parts of Ramadi west of Baghdad at the start of the year.
An estimated 500,000 Iraqis have fled Mosul, home to 2 million people, and the surrounding province, many seeking safety in the autonomous Kurdistan region.
Security sources said ISIL militants on Wednesday drove more than 60 vehicles into Tikrit, the Sunni home town of former Iraqi dictator Saddam Hussein, occupying local government buildings and raising ISIL's black flag overhead.
Foreign Minister Hoshyar Zebari said Iraq's leaders must unite to face a "mortal" threat. "There has to be a quick response to what has happened," he said during a trip to Greece.
Zebari said Baghdad would work with forces from Kurdistan in the north to drive the fighters out of Mosul after they put Iraqi security forces to flight on Tuesday.
Maliki described the fall of Mosul as a "conspiracy" and said those who had abandoned their posts would be punished. He also said Iraqis were volunteering in several provinces to join army brigades to fight ISIL.
"In every province a whole brigade has been formed and there are hundreds of thousands of requests to volunteer and confront the danger facing Iraq," he said.
In a statement on its Twitter account, ISIL said it had taken Mosul as part of a plan "to conquer the entire state and cleanse it from the apostates", referring to the state of Nineveh of which the city is the capital.
ISIL, led by Abu Bakr Al-Baghdadi, broke with Al-Qaeda's international leader, Osama bin Laden's former lieutenant Ayman Al-Zawahri, and has clashed with Al-Qaeda fighters in Syria.
ISIL's rapid advances show that Iraq's security forces - trained and equipped by Washington at a cost of nearly $25 billion and numbering more than a million strong - are outmatched against foes who once took on the full might of the United States.
Overnight on Tuesday, ISIL militants moved on Baiji, home to Iraq's largest refinery, which can process 300,000 barrels per day and supplies oil products to most of Iraq's provinces and as well as Baghdad.
Security sources said the fighters drove into the town of Baiji in armed vehicles, torching the court house and police station before freeing prisoners.
Local officials and residents said they withdrew on Wednesday into the surrounding villages after local tribal leaders persuaded ISIL not to take over the energy installations in Baiji, including the refinery and power stations.
The international community made several statements on Wednesday regarding the recent events in Iraq, including the European Union, the League of Arab States, the US, Turkey and Iran.
The EU and the League of Arab States (LAS) urged democratic forces in Iraq to unite against Islamic jihadists who are mounting a surprise offensive against the Baghdad government.
"In particular, the LAS and the EU call on the government of Iraq and the government of the Kurdistan region to combine their political and military forces in order to restore security to Mosul and Nineveh," the statement said.
UN Secretary General Ban Ki-moon expressed grave concern Tuesday about the jihadist takeover of Iraq's second city of Mosul, calling on political leaders to unite in the face of threats.
Turkey pledged Wednesday to retaliate if its 48 citizens kidnapped by jihadists in northern Iraq are harmed, while the Turkish foreign minister called for an emergency meeting on the situation.
Iran offered neighbouring Iraq support against "terrorism".
Washington vowed to help as many as half a million people who have fled fierce fighting in Iraq, the nominee to be the next US envoy to Baghdad said Wednesday.