Jihadists were in firm control Wednesday of Iraq's second city Mosul after seizing it and a swathe of other territory, patrolling its streets and calling for government employees to return to work.
The Sunni militants including fighters from the Islamic State of Iraq and the Levant (ISIL) overran Mosul on Tuesday, dealing the Shia-led Iraqi government a spectacular blow and sparking a mass exodus of an estimated half a million people.
Prime Minister Nuri al-Maliki asked parliament to declare a state of emergency and announced citizens would be armed to fight them, while the United States warned that ISIL threatened the entire region.
The jihadist capture of Mosul, its surrounding region of Nineveh, and areas of Kirkuk and Salaheddin provinces posed significant challenges to the federal government but a risk consultancy and a senior official said it would have limited impact on Iraq's oil exports.
Gunmen, some dressed in military uniforms, guarded government buildings and banks in Mosul on Wednesday, said witnesses reached by telephone from Bashiqa, a town to the east.
They called over loudspeakers for government employees to go back to work.
"I did not open the door of the shop since last Thursday because of the security conditions," said Abu Ahmed, a 30-year-old shop-owner.
Witnesses reported that dozens of families continued to flee the city, but Abu Ahmed said: "I will remain in Mosul. This is my city in any case, and the city is calm now."
Bassam Mohammed, a 25-year-old university student, also said he would stay in Mosul, Iraq's second-largest city which normally has a population of around two million people.
"But I am afraid about freedoms, and I am especially afraid that they will impose new laws on us," Mohammed said.
Jihadists on Tuesday seized all of Mosul and Nineveh province, long a militant stronghold and one of the most dangerous areas in the country, and also took areas in Kirkuk province, to its east, and Salaheddin to the south.
ISIL said it was behind operations in Nineveh in a series of messages on Twitter, while officials have also blamed the jihadist Sunni group for the unrest.
But it is possible other militant groups were also involved.
The International Organisation for Migration said Wednesday that around half a million Iraqis had fled their homes in Mosul following the city's fall, fearing increased violence.
The Geneva-based organisation said its sources on the ground estimated the violence leading up to ISIL's total takeover "displaced over 500,000 people in and around the city".
The violence in Mosul "has resulted in a high number of casualties among civilians," the IOM added.
Known for its ruthless tactics and suicide bombers, ISIL is arguably the most capable force fighting President Bashar al-Assad inside Syria as well as the most powerful militant group in Iraq.
The takeover of Mosul prompted the United States to voice deep concern about the "extremely serious" situation and warn that ISIL poses "a threat to the entire region".
UN chief Ban Ki-moon's spokesman said he was "gravely concerned by the serious deteriorating of the security situation in Mosul".
ISIL is led by the shadowy Abu Bakr al-Baghdadi and backed by thousands of Islamist fighters in Syria and Iraq, many of them Westerners, and it appears to be surpassing Al-Qaeda as the world's most dangerous jihadist group.
Western governments fear it could eventually emulate Al-Qaeda and strike overseas, but their biggest worry for now is likely the eventual return home of foreign fighters attracted by ISIL and Baghdadi.
The New York-based Eurasia Group consultancy said ISIL's capture of Mosul would have limited impact on Iraq's oil exports.
"ISIS will use cash reserves from Mosul's banks, military equipment from seized military and police bases, and the release of 2,500 fighters from local jails to bolster its military and financial capacity," said Ayham Kamel, its Middle East and north Africa director.
"We do not anticipate a sharp deterioration in the security environment in these more stable provinces that would materially impact Iraq's oil export volumes," he said.
A senior government official said "the oil sector is not affected and will not be affected by what is happening, because most of the facilities are in central and south Iraq," though he warned that further militant advances could change this.
Bloodshed is running at its highest levels in Iraq since 2006-2007, when tens of thousands were killed in clashes between the country's Shia majority and Sunni Arab minority.