The Islamic State group has taken control of the rebel-held half of the eastern Syrian city of Deir Ezzor, buoyed by advances in neighbouring Iraq.

Rival rebel groups fighting forces loyal to President Bashar al-Assad either gave in and joined the jihadists or fled from the strategic Euphrates valley city, the Syrian Observatory for Human Rights said.

Assad forces remain in control of the other half of the city, a provincial capital and pre-war hub of the country's oil industry.

According to the Observatory, IS are now in control of "95% to 98% of Deir Ezzor province".

Only the regime-controlled half of Deir Ezzor city, a handful of villages and the military airport remain out of IS control.

The observatory said that rivals of IS, including fighters of Al-Qaeda's Syria affiliate Al-Nusra Front, lost control after negotiations failed with the jihadists who proclaimed a "caliphate" straddling Syria and Iraq last month.

"Fighters from Al-Nusra Front and the Islamist rebel movement Ahrar al-Sham withdrew from their bases in the city, while others pledged their loyalty to IS," the observatory said.

"IS killed the Deir Ezzor chief of Al-Nusra, and raised their flag in the city."

IS seized huge supplies of weapons and money in Iraq's second city Mosul last month in a lightning offensive that saw it capture a swathe of territory north and west of Baghdad.

Its gains in Iraq have tipped the balance in the struggle for power in rebel-held areas of eastern and northern Syria, where it has been fighting Al-Nusra and its rebel allies since January.

IS already controls the city of Raqa upstream from Deir Ezzor where it has earned a reputation for brutality in its enforcement of its extreme form of Islam, with public executions, including crucifixions.