Sunni rebels from an al Qaeda splinter group overran the Iraqi city of Tikrit on Wednesday and closed in on the biggest oil refinery in the country, making further gains in their rapid military advance against the Shi'ite-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 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 U.S. 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.
"I was in a security station in Tikrit. There were three policemen with me and we were taken by surprise when militants started shooting machine guns and speaking on loudspeakers, telling us to leave," said police captain Saleh Al-Jubbouri.
"The three policemen changed their clothes and vanished."
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.(Full Story)
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.
ISIL has become a dominant player in Iraq and Syria, where it has seized a string of cities over the past year, often fighting other Sunni groups.
The United States, which pulled its troops out from Iraq two and half years ago, pledged to help Iraqi leaders "push back against this aggression".
It said Washington would support "a strong, coordinated response", adding that "ISIL is not only a threat to the stability of Iraq, but a threat to the entire region".
ISIL control in the Sunni Anbar province as well as around Mosul would help the Islamist group consolidate its grip along the frontier with Syria, where it is fighting President Bashar al-Assad, an ally of Shi'ite Iran.
Members of Iraq's Shi'ite majority have also been crossing the border to fight in Syria alongside Assad's forces.
In Sadr city, a Shi'ite slum in Baghdad, men were stockpiling weapons in anticipation of a battle against ISIL.
"The army has proven to be a big failure. People have begun to depend on themselves because ISIL may enter Baghdad any minute," said Muhannad al Darraji from Sadr City.
"I know 70 young men who are awaiting orders. They all think this is a battle for survival, with an enemy that will be here to kill the Shi'ites. It is an enemy without mercy."
At about the same time as they were speaking, a suicide bomber blew himself up in Sadr City, killing at least 16 people.
The governor of Mosul blamed Maliki for failing to act upon his warnings about the threat of ISIL.
"The entry of ISIL to Mosul was through the desert from Syria," Atheel al-Nujaifi said. "There are camps in the desert and we have repeatedly asked the government to bomb these camps instead of luring ISIL into the cities to fight it."
At a checkpoint on the road between Mosul and Arbil, residents who fled with little more than the clothes on their backs were stunned by the turn of events and did not know what to make of their city's new occupants.
A 40-year-old man who fled the city with his family said: "We are frightened because we don't know who they are. They call themselves revolutionaries. They told us not to be scared and that they came to liberate and free us from oppression."
Critics say the failure of Maliki, a Shi'ite Muslim who has been in power for eight years, to address grievances among the once dominant Sunni minority led to a rise in Sunni militancy and pushed Sunni groups and tribes to rally behind ISIL.
Many Sunnis feel disenfranchised and some have made common cause with foreign Islamist radicals, first against the U.S. troops that overthrew Saddam in 2003 and now against Shi'ite-led Iraqi forces.
Maliki also has also antagonized the Kurds, who run their own region in the north of the country and have their own large and disciplined military force, the Peshmerga. Some officials in Baghdad spoke of seeking help from the Peshmerga.
(Additional reporting by Raheem Salman, Ahmed Rasheed and Isra al-Rubei'i in Baghdad; Writing by Isabel Coles; Editing by Samia Nakhoul and Giles Elgood)