French Foreign Minister Laurent Fabius said Monday that jihadists spearheading a militant offensive in Iraq have sold oil from captured areas to the regime of Syrian President Bashar al-Assad.

Fabius said the sale was evidence of the "confusing" nature of the escalating conflict in the Middle East in which Assad and the jihadists are in theory on opposing sides.

The rebels, previously known as the Islamic State of Iraq and the Levant (ISIL), declared a "caliphate", or Islamist state, straddling Iraq and Syria at the weekend.

"We have proofs that when ISIL has taken over oil it has sold oil to the (Assad) regime," Fabius told a news conference in New Delhi, without elaborating.

Other revenues and weapons have been seized during the advance by the Islamist fighters, particularly in the town of Mosul.

In Syria the fighters, who have renamed themselves simply the Islamic State (IS), control large swathes of territory, but also face opposition from other rebel groups because of their reputation for brutality.

Referring to how the rebels in Syria and the Assad regime use each other to derive legitimacy, Fabius said: "Officially they are combatting each other but in fact they are very often helping each other."

The situation in Iraq is "very, very, very worrying," he added.

"Why? Because it is probably the first time that a terrorist group -- and a ferocious terrorist group -- is in a position, if there is no reaction, to take over the whole country, and a rich country, with enormous consequences for the region and the world," he said.

The solution is for Iraq to unite behind the government and the army to drive out the jihadists, he said.