Iraq's asking the U.S. for air strikes to help stop the onslaught of predominantly Sunni Muslim insurgents.
The latest target for the Islamic State of Iraq and the Levant rebels was the country's biggest oil refinery at Baiji.
U.S military officials say all options are being considered.
(SOUNDBITE) (English) U.S. ARMY GENERAL MARTIN DEMPSEY, THE CHAIRMAN OF THE JOINT CHIEFS OF STAFF, SAYING:
Al Qaeda-inspired extremists raising flags over Iraq's embattled cities triggers in me the same thing that runs through the mind of any veteran who served there, which is bitter disappointment that Iraq's leaders failed to unite for the good of their people. I share alarm about the future of Iraq
In Baghdad the Iraqi military still patrol the streets
But more than two million Iraqis have signed up not for the army, but for largely Shiite militias to counter the insurgents.
Iraqi leaders are appealing for unity amid fears this conflict is could tear the country apart
(SOUNDBITE) (Arabic) IRAQI FOREIGN MINISTER, HOSHYAR ZEBARI, SAYING:
"Iraq is certainly in danger, it needs Arab states and the whole world to stand by it, against this crisis. The danger of this country breaking apart and dividing is present. And god forbid if this happens, this would be even more dangerous than what is happening in Syria."
Like the civil war in Syria next door, the new fighting threatens to draw in regional neighbours along sectarian lines.