Islamist rebel fighters captured two more Iraqi towns overnight in a relentless sweep south toward the capital Baghdad in a campaign to re-create a medieval caliphate carved out of fragmenting Iraq and Syria.

U.S. President Barack Obama threatened military strikes against the radical Islamic State of Iraq and Syria on Thursday, highlighting the gravity of ISIS’s threat to redraw borders in an oil-rich region with the risk of any new entity turning into a launchpad for attacks on Western interests.

In the spreading chaos, Iraqi Kurdish forces seized control of Kirkuk — an oil hub just outside their autonomous enclave that they have long seen as their traditional capital — as Iraqi government troops abandoned posts in panic over ISIS’s advance.