Baghdad asked Washington Wednesday to carry out air strikes on militants who attacked Iraq's main oil refinery and seized more territory in the north, amid warnings the country's future was at stake.

The appeal for strikes -- which the White House said US President Barack Obama has not ruled out -- came as fighters, led by the Islamic State of Iraq and the Levant (ISIL), were pressing an eight-day offensive, with Prime Minister Nuri al-Maliki pledging to face down "terrorism."

While officials touted progress, militants seized three villages in northern Iraq and India said 40 of its nationals were kidnapped in Mosul, the city captured last week by insurgents at the onset of their offensive.

"Iraq has officially asked Washington to help... and to conduct air strikes against terrorist groups," Foreign Minister Hoshyar Zebari told reporters in Saudi Arabia.

However, Zebari said "a military approach will not be enough. We acknowledge the need for drastic political solutions."

The United States spent billions of dollars over several years training and arming Iraqi security forces after disbanding the Sunni-led army following the 2003 invasion that ousted dictator Saddam Hussein.

Washington has deployed an aircraft carrier to the Gulf and sent military personnel to bolster security at its Baghdad embassy, but Obama insists a return to combat in Iraq is not in the cards.

The White House said on Wednesday that the president had not ruled out using drone strikes to target the insurgents.

Iraq, meanwhile, has scrambled to repel the militant offensive, with Maliki firing disgraced security commanders and vowing to "face terrorism and bring down the conspiracy."

"We will teach (militants) a lesson and strike them," he said.

- Setback, not defeat -

Maliki said that security forces, which wilted in the face of the offensive that overran all of one province and chunks of three more in a matter of days last week, had suffered a "setback" but had not been defeated.

His security spokesman, Lieutenant General Qassem Atta, said security forces would shortly retake full control of Tal Afar, a Shiite town in the north that lies along a strategic corridor to Syria.

That would provide a base from which to launch operations to recapture Mosul, he said.

With regional tensions rising, Iranian President Hassan Rouhani said the Islamic republic "will do everything" to protect Shiite shrines in Iraqi cities against the militant assault.

And Saudi Arabia warned of the risks of a civil war in Iraq with unpredictable consequences for the region, while the United Arab Emirates recalled its envoy to Baghdad, voicing concern over "exclusionary and sectarian policies."

The crisis, which has displaced hundreds of thousands of Iraqis, threatens to break the country apart, while the assault on Baiji oil refinery Wednesday further spooked international oil markets.

Prices for both benchmark oil exports -- Brent crude and West Texas Intermediate -- rose after the pre-dawn attack in Salaheddin province, north of Baghdad.

Officials said security forces controlled the refinery, but clashes were ongoing, with Atta saying that 40 militants were killed and that several tanks containing refined products caught fire.

The refinery was shut down and some employees evacuated on Tuesday due to a drop in demand caused by the militant drive.

- Cautiously watching -

World oil producers have cautiously watched the unfolding chaos in Iraq, which exports around 2.5 million barrels of oil per day, and said that the country's vast crude supplies, mostly in the south, were safe for now.

But the militants' swift advance has sparked international alarm and the United Nations has warned that the crisis was "life-threatening for Iraq."

Analysts suggested that the country could unravel, surviving at best as a federal state.

"I don't think it's impossible, but it is highly unlikely," said John Drake, an Iraq analyst with AKE Group, when asked if Iraq could remain united.

In New Delhi, the foreign ministry said 40 Indian construction workers were abducted in Mosul while 46 Indian nurses were stranded in the militant-held city of Tikrit.

Last week, as the offensive got underway ISIL fighters kidnapped 49 Turks in Mosul, including diplomats and children, after seizing 31 Turkish truck drivers.

Maliki sacked several top security commanders on Tuesday, then stood alongside several of his main rivals in a rare display of unity among the country's fractious political leaders.

The dismissals came after soldiers and police fled en masse as insurgents swept into Mosul, a city of two million, on June 9.

Some abandoned their vehicles and uniforms when faced with the insurgents, which are led by ISIL fighters but also include Saddam loyalists.

After taking Mosul, militants captured a major chunk of mainly Sunni Arab territory stretching towards the capital.

Despite the initial poor performance of the security forces, Pentagon spokesman Rear Admiral John Kirby said Iraqi troops, with help from Shiite volunteers, were "stiffening their resistance" around Baghdad.