The Iraqi Security Forces and the Islamic State (IS) militants are reportedly fighting for control of the country's largest refinery in the town of Baiji, 200km north of Baghdad.
The militants currently control several installations of the refinery, including a distribution point and storage tanks, after entering the facility earlier this month, reported Reuters.
An unnamed Iraqi military operations command source said an Iraqi army battalion had arrived to help protect the refinery on 16 April, preventing the insurgents from capturing any major infrastructure.
US Joint Chiefs of Staff chairman general Martin Dempsey acknowledged that the militants had entered the refinery by penetrating its outer perimeter, but declined that the refinery is not at risk now.
"The refinery itself is at no risk right now, but... we're focusing a lot of our ISR (intelligence, surveillance and reconnaissance) and air support there.
"Once Iraqis have full control of Baiji, they will control all of their oil infrastructure both north and south and deny [Islamic State] the ability to generate revenue through oil, so Baiji is a more strategic target and that's why the focus right now is in fact on Baiji."
Despite suffering a series of setbacks in the recent days, including loss of Tikrit, the provincial capital of the Saladin Governorate of Iraq, the group launched a fresh offensive in the country, overrunning several villages on the edge of Ramadi, the capital of Anbar province.
Iraqi Prime Minister Haider al-Abadi said: "I think it's timed to (coincide with) my visit to the U.S. I think they want to show that despite the support that Iraq is receiving, they are there to cause damage."
Baiji refinery produces a third of Iraq's oil output, and has been the centre of fighting between Iraqi forces and the militants in June 2014.