Iraqi government forces regained full control Thursday of the country's biggest oil refinery after heavy fighting with Sunni militants attempting to seize it, officials said.

Sunni Arab insurgents had stormed the complex in Baiji, south of Iraq's militant-held second city Mosul, on Wednesday, setting fire to several storage tanks for refined products in a move that sent jitters through world oil markets.

With Islamic State of Iraq and the Levant fighters, flags and emblems everywhere, there is no mistaking who controls the north Syria city of Raqa.

Fighters from ISIL, the jihadist group that is now spearheading an offensive in Iraq, already regard the city that is strategically placed in the Euphrates valley as their "capital", activists say.

A brutal jihadist group has garnered headlines for an Iraq onslaught, but it is actually the leading member of a fragile Sunni coalition including Saddam loyalists and others unified only by a common enemy.

The swift assault, spearheaded by jihadist group the Islamic State of Iraq and the Levant (ISIL), swept down from north Iraq last week, overrunning all of one province and major areas of three others.

Israel fears that a jihadist offensive that has swept up swathes of Iraq may prompt concessions to arch-foe Iran from its longtime ally the United States.

"If Washington needs Tehran's help to solve the Iraq crisis, the United States will need to be more flexible in negotiations on Iran's nuclear programme," public radio cited a senior official as saying.

Australian's foreign minister met Arab and Islamic ambassadors Thursday to try to soothe concerns over Canberra's stance on East Jerusalem, insisting there was no policy change despite moves to stop referring to it as "occupied".

The meeting followed fury after Attorney-General George Brandis said the term would not be used as it carried pejorative implications and was neither appropriate nor useful.

China is to relocate some workers in Iraq -- where it is the biggest foreign investor in the oil industry -- in the face of spreading violence, the foreign ministry said Thursday.

Militants from the jihadist group the Islamic State of Iraq and the Levant (ISIL) have captured vast amounts of Iraqi territory in a lightning offensive that is entering its second week, prompting major international concern..

Israeli troops arrested some 30 Palestinians in the West Bank overnight as they ramped up a massive search for three teenagers believed kidnapped by Hamas, the army said on Thursday. 

The arrests raised the  number of Palestinians detained to 280, of whom around three-quarters are members of the Islamist Hamas movement, a military statement said. 

India said Thursday it knows the location of its 40 construction workers abducted in violence-torn Iraq, as several of their families said they have spoken with the captured men.

Armed militants abducted the workers on Monday from a stadium where they were working in the northern city of Mosul but no demands for ransom have been made, the Iraqi Red Crescent Society told AFP.

An international rights group says Kurdish authorities ruling three enclaves in northeastern Syria have committed abuses, included arbitrary arrests of political opponents.

Human Rights Watch says the Kurdish Democratic Union Party, or PYD, has abused its opponents in detention, and has failed to address abductions and unresolved killings in areas it controls.

Foreign Minister Julie Bishop Thursday said she was deeply concerned about 150 Australians learning the "terrorist trade" fighting alongside Sunni militants in Iraq and Syria.

The country's top diplomat was briefed by her intelligence analysts this week on the number of Australians, some dual citizens, taking up arms alongside rebel groups.