Iraq’s largest oil refinery near the northern city of Baiji.

BAGHDAD — “Islamic State” militants clashed with security forces inside Iraq’s largest refinery on Thursday and held on to recent gains in the west of the country, as Prime Minister Haider al-Abadi said the extremist group remained “very, very dangerous”.

The insurgents suffered a major defeat this month when Iraqi troops and Shi’a paramilitaries routed them from the city of Tikrit, but are now striking back at Baiji refinery and in the western province of Anbar.

Baiji was attacked several days ago by the militants, who blasted their way through the perimeter and took control of several installations, including a distribution point and storage tanks. They have managed to hold those parts of Baiji.

A source in the military operations command for Salahuddin province where Baiji is located said an Iraqi army battalion had arrived to help defend the refinery on Thursday, and the militants had not been able to take any major infrastructure.

The top U.S. military officer, General Martin Dempsey, told reporters “the refinery itself is at no risk right now.” But he expressed concern that the militants had penetrated the refinery’s outer perimeter and were now inside.

IS sympathizers circulated photographs on social media late on Thursday appearing to show the militants inside the refinery with the caption: “the soldiers of the (Islamic) State advance to cleanse what is left of Baiji refinery”.

The images could not be independently verified.

Speaking at the Center for International and Strategic Studies think tank in Washington, Abadi said the militants wanted to send a message after losing Tikrit.

“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.”

During his visit, Abadi outlined plans to prioritize the battles in both Baiji and Anbar, where Islamic State overran an area at the eastern edge of the provincial capital Ramadi on Wednesday.

The government last week announced a new offensive to recapture Anbar, seeking to build on the recent victory in Tikrit, but have since lost ground in the vast desert terrain.

Anbar governor Sohaib al-Rawi speaking on Iraq state TV said “all sons of Iraq” were welcome to participate in liberating the province from Islamic State, indicating no objection to the involvement of Shi’ite paramilitaries.

Dempsey said Baiji was more strategic than Anbar, given Baiji’s critical oil infrastructure, and did not appear to rule out the possibility Ramadi might fall, if only temporarily.

“I would much rather that Ramadi not fall, but it won’t be the end of the campaign should it fall. We got to get it back,” Dempsey, chairman of the Joint Chiefs of Staff, told a Pentagon news conference.

Pro-government militia have played a leading role in driving back the insurgents after the army disintegrated last summer, but some tribes in Anbar, a Sunni province, have expressed reservations about the involvement of paramilitaries there.

A police source in Anbar said Shi’a militias had arrived in Ramadi to take part in trying to push back IS.

Speaking to a forum held by the U.S. Chamber of Commerce, Abadi said his government was committed to essential reforms, including reducing hurdles for business and tackling corruption.

“It is our aim to provide help and encouragement to the private sector, and we have to remove bureaucracy and red tape,” Abadi said. “In Iraq I think it’s playing a role in delaying investment. Sometimes I can see it as criminal as terrorism.”

Reforms undertaken so far, Abadi said, include easing visa requirements for investors, reducing registration procedures for new businesses, automating some bureaucratic processes, and granting greater authority to local governments.

The fiscal crisis in Iraq had focused officials’ minds on the need for a stronger private sector in Iraq’s economy, he said.