The Syrian army has reached the last town by Islamist militants on the road to its besieged garrison in the east, a monitoring group said on Friday.
Government forces are on the outskirts of Al-Sukhna, some 70 kilometres (45 miles) northeast of the famed ancient city of Palmyra, the Syrian Observatory for Human Rights said.
The town is the last on the desert road to the eastern city of Deir Ezzor, where a government garrison has held out under siege by the Islamic State (IS) militants since early 2015.
Al-Sukhna and the oil and gas fields in the surrounding countryside have been held by IS since 2015.
"Heavy fighting is ongoing between the two sides, with regime artillery and rocket fire," Observatory director Rami Abdel Rahman said.
He said Russian warplanes were supporting the government advance.
IS commanders fled into the surrounding mountains as the army neared the town, he added.
Since May, the army has been conducting a broad military campaign to recapture the vast desert that separates the capital Damascus from Deir Ezzor and other towns along the Euphrates Valley.
Already defeated in its Iraqi bastion of Mosul, IS is facing multiple assaults in Syria.
The US-backed Syrian Defence Forces now control more than half of its most important remaining stronghold Raqa.