Iraqi forces held off attacks on a key town and an oil refinery as top US diplomat John Kerry pushed Tuesday for unity in a conflict the UN says has killed nearly 1,100.

But those successes were marred when civilians were killed by air strikes aiming to push back Sunni Muslim insurgents, led by the Islamic State of Iraq and the Levant (ISIL), who have seized swathes of five provinces north and west of Baghdad.

The onslaught has displaced hundreds of thousands of people, alarmed world leaders and put Prime Minister Nuri al-Maliki under pressure at home and abroad.

After wilting in the first attacks two weeks ago, loyalists appear to be performing better, holding off assaults at the Baiji oil refinery in the north, the country's largest, and the strategic western town of Haditha.

Repeated assaults on the complex, which once provided some 50 percent of domestic refined petroleum products, have caused jitters on world markets.

Brent crude for August delivery added two cents to $114.14 a barrel in London Tuesday.

Elsewhere, security forces and allied tribal fighters saw off a militant attack on Haditha in Anbar province, after recaptured the Al-Waleed border crossing with Syria on Monday.

- Air strikes -

Iraqi forces also carried out air strikes on the town of Baiji, outside the refinery, and on Husseibah in Anbar province, west of the capital.

State television said 19 "terrorists" were killed in Baiji, but officials and witnesses said the casualties were civilians.

In Husseibah, six civilians were among 13 killed.

Loyalists have struggled to stem the insurgent advance, with Maliki's security spokesman saying hundreds of soldiers have been killed since the offensive began on June 9 -- the most specific official information so far on government losses.

The UN said Tuesday at least 1,075 people were killed and 658 wounded between June 5 and 22.

Militants were able to overrun the strategic Shiite-majority northern town of Tal Afar and its airport after days of heavy fighting and, at the weekend, swept into Rawa and Ana towns in Anbar province after taking the Al-Qaim border crossing with Syria.

On Tuesday, the cabinet decided that salaries of all government employees in militant-controlled areas will be held back until the conflict ends, meaning some civil servants may be unpaid for an extended period.

Kerry was in the autonomous Kurdish regional capital of Arbil to urge president Massud Barzani to work to uphold Iraqi cohesion. He told him "this is a very critical time for Iraq and the government formation challenge is the central challenge that we face."

Kurdish forces were "really critical in helping to draw a line with respect to ISIL," he added.

Kerry had met Maliki and other leaders in Baghdad Monday to urge the speedy formation of a government following April elections in order to face down the insurgents.

Washington's "support will be intense, sustained, and if Iraq's leaders take the necessary steps to bring the country together, it will be effective," Kerry said.

"This is a critical moment for Iraq's future."

US leaders have stopped short of calling for Maliki to go, but there is little doubt they feel he has squandered the opportunity to rebuild Iraq since American troops withdrew in 2011.

Barzani told Kerry, who has since departed, that Kurds seek "a solution for the crisis that we have witnessed," but warned that it had created a "new reality and a new Iraq."

The militant offensive allowed Iraqi Kurds to take control of disputed territory they want to incorporate into their autonomous region over Baghdad's strong objections.

- 'The time is here' -

Speaking to CNN before Tuesday's talks, Barzani called for Maliki to step down, blaming him "for what has happened" in Iraq.

Pressed on whether Iraqi Kurds would seek independence, he said: "The time is here for the Kurdistan people to determine their future and the decision of the people is what we are going to uphold."

President Barack Obama has offered to send up to 300 military advisers to Iraq, but has so far not backed air strikes as requested by Baghdad.

ISIL aims to create an Islamic state incorporating both Iraq and Syria, where it has become a major force in the rebellion against President Bashar al-Assad.

It has commandeered an enormous quantity of cash and resources during the advance, bolstering coffers already the envy of militant groups worldwide.