Sunni rebels battled their way into the biggest oil refinery in Iraq on Wednesday, and the president of neighbouring Iran raised the prospect of intervening in a sectarian war that threatens to sweep across Middle East frontiers.

Sunni fighters were in control of three quarters of the territory of the Baiji refinery north of Baghdad, an official said there, after a morning of heavy fighting at gates defended by elite troops who have been under siege for a week.

A lightning advance has seen Sunni fighters rout the Shi’ite-led government’s army and seize the main cities across the north of the country since last week.

The fighters are led by the Islamic State of Iraq and the Levant which aims to build a Sunni caliphate ruled on mediaeval precepts, but also include a broad spectrum of more moderate Sunnis furious at what they see as oppression by Baghdad.

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