Islamic State militants no longer control any oil wells in Iraq after being ousted by government forces last week from an area near Kirkuk, the oil ministry said on Wednesday.

The ultra-hardline Sunni Muslim group were driven out of Shirqat on Thursday by US-backed Iraqi forces. Last month it lost the Qayyara oilfield, south of Mosul, to government forces thrusting northwards in an offensive to retake the largest city under IS control.

Deprived of oil income, IS will have to find other financing means such as increasing taxation and fines in areas still under its control, said Muthana Jbara, a provincial security official.

Iraqi forces have yet to recapture the Najma oilfield, near Qayyara, but its producing wells are no longer accessible to IS because of the ongoing government offensive and air strikes, according to oil and security officials.

"Najma has yet to be liberated because some sites are in the conflict zone. The reality is that it is extremely difficult to extract and smuggle oil while our forces are advancing towards Mosul...," oil ministry spokesman Asim Jihad said.

Islamic State proclaimed a caliphate over parts of Iraq and Syria in 2014 but has lost a significant amount of territory since then to US-backed offensives, though it still controls oil wells on Syrian land.-Reuters