Retreating jihadists set three wells ablaze at a northern Iraq oil field Thursday as they battled Kurdish forces who launched a major attack nearby, officials said.

The Islamic State (IS) jihadists set the wells on fire before deserting the Ain Zalah field, which was seized by militants along in early August, an official from the North Oil Company said.

A colonel in the Kurdish peshmerga forces said they had launched a major attack that has seen the jihadists pushed back from several villages in the area of the oil field.

The officer and Nineveh provincial council chief Bashar al-Kiki both said that Kurdish forces had also taken control of Batana mountain, near Zumar.

Kiki said the strategic position would help the peshmerga retake the Zumar area from jihadists, and that the Kurdish forces are supported by US air strikes.

IS-led militants launched a sweeping offensive in June that overran large areas of Iraq, and turned their sights on Kurdish forces in the north earlier this month, driving them back toward Arbil, the capital of their three-province autonomous region.

That advance, during which the militants targeted minority groups and forced some 200,000 people to flee, sparked a campaign of US air strikes which, combined with international shipments of arms and ammunition, have helped the Kurds claw back some ground.

The militants reportedly rake in significant volumes of cash from the sale of oil from fields they control.

They have made repeated attempts to seize the Baiji oil refinery, which once filled some 50 percent of Iraq's demand for refined petroleum products, but have each time been driven back.

The militant offensive has wreaked havoc on northern production and exports, but Iraq's main southern fields and export terminals have not been affected by the violence.

Texas ruling on oil boost of confidence, Kurds say
Erbil, Iraq (UPI) Aug 27, 2014 -A Texas court ruling to dismiss an order to seize Kurdish oil parked off the U.S. coast should give potential buyers confidence, the Kurdish government said.

A Texas judge had ordered U.S. Marshals to seize Kurdish oil loaded onto the United Kalavrvta tanker, parked off the coast of Galveston, Texas, in international waters. The semiautonomous Kurdish government and the federal government in Baghdad filed competing claims in Texas, though the court eventually sided with the Kurdish claims that its oil could reach U.S. ports.

"The ruling of the Texas court should give confidence to buyers of Kurdistan crude oil in the United States and elsewhere," Kurdish Minister of Natural Resources Ashti Hawrami said in a statement Tuesday.

The minister said all Kurdish crude oil exports and sales are legal according to the terms spelled out in the Iraqi constitution, a claim countered by Baghdad.

The U.S. government in the past has sided with the Iraqi government, which says it has the sole authority over exports. Speaking to reporters Tuesday, U.S. State Department spokeswoman Jen Psaki said the issue was a commercial matter.

"The United States government is not involved," she said.