Dozens of al Qaeda militants took control of the southern Yemeni town of Ahwar on Saturday, residents said, consolidating the group's control over much of the region.
The coastal city and surrounding district, in Abyan province, is home to over 30,000 people and is an important geographic link between the major port city of Mukalla to the east and the smaller town of Zinjibar, both of which Al Qaeda seized months ago.
"At dawn this morning the Al Qaeda gunmen clashed with the Popular Resistance forces, killing three of them. They attacked the sheikh in charge of the area and after he escaped set up street checkpoints and planted their black flag on government buildings," one resident said.
Al Qaeda in the Arabian Peninsula (AQAP) has expanded during Yemen's civil war, which triggered a military intervention by a Gulf Arab coalition last March.
Sunni Muslim AQAP is viewed by Western analysts as the most dangerous arm of the global militant organization, and claimed responsibility for the deadly January 2015 attack in Paris on the satirical French magazine Charlie Hebdo.
It has made its advances in Yemen as the Saudi-led coalition forces, which back the ousted government, have clashed with the country's ascendant Houthi movement, which they fear is a proxy for Shia Muslim Iran. The Houthis and Iran deny this.
The government, based in Yemen's second largest city of Aden in the southwest, has struggled to reverse the militants' advance, even in areas close to the presidential palace.
Residents in Aden's Mansoura neighbourhood said heavy explosions reverberated on Friday night as gunmen launched shoulder-fired rockets in a failed attempt to take over a container port.
But AQAP has also suffered setbacks, losing its leader and several top officials to U.S. drone strikes, and is facing competition from the new Yemen branch of militant group Islamic State.