The Islamic State extremist group has lost 16 per cent of its territory in the first nine months of 2016, and its most recent setbacks are "unprecedented in their strategic significance," analysis firm IHS Markit said on Sunday.

The group currently controls some 65,500 square kilometres of Syria and Iraq, down from over 90,000 square kilometres at the beginning of the previous year, according to an analysis released by the firm.

The extremist organization's most recent losses have been near the Syrian-Turkish border, to which it has now lost all access, and in the hinterland of Mosul in northern Iraq, the largest city it holds.

“The loss of direct road access to cross-border smuggling routes into Turkey severely restricts the group’s ability to recruit new fighters from abroad, while the Iraqi government is poised to launch its offensive on Mosul,” Columb Strack, a senior analyst with IHS Markit, said.

Iraq's Prime Minister Haider al-Abadi has vowed to push Islamic State back out of Mosul this year, after his forces recaptured the key western cities of Fallujah and Ramadi.

But ISH Markit said that fighting between Syrian Kurdish forces and Islamic State had dropped by 87 per cent since Turkey launched cross-border operations that it said were aimed at both groups.

The Kurdish-led Syrian Democratic Forces (SDF) have been the key US ally on the ground against Islamic State in Syria.

They have driven the jihadists from wide swathes of northern and north-eastern Syria, including most of the territory the extremist group held on the Turkish border.

Turkey, however, distrusts them due to their links with banned Kurdish rebels operating on its territory.

“There is deep underlying competition between the Kurdish-dominated SDF and Turkey’s Sunni proxies over their conflicting ambitions for Syria’s future,” Strack said.

“For the time being, the US is cooperating with both, but once the Islamic State has been defeated as a conventional force, Washington will have to pick a side.”

Islamic State, formerly the Iraqi branch of the al-Qaeda jihadist network, captured swathes of Sunni-populated northern and western Iraq in a lightning offensive in June 2014.

Faced with growing territorial losses, it has now shifted from its previous triumphal tone boasting of the establishment of its vision of Islamic rule.

Analysts say it is now likely to focus more on terrorist attacks in Syria and Iraq as well as in Western countries to compensate for its declining ability to function as a state.

IHS Markit also noted that the proportion of Russian airstrikes in Syria to target Islamic State was declining.

In the first quarter of 2016, 26 per cent of recorded Russian airstrikes targetted Islamic State, but that fell to 17 per cent in the third quarter of the year, the firm said.

UN officials and Western powers have in recent days expressed outrage at airstrikes that have hit hospitals, an aid convoy and other civilian targets in rebel-held areas of northern Syria, including eastern Aleppo city.

The US as well as local activists and the pro-opposition Syrian Observatory for Human Rights accuse Russia of responsibility for some of those strikes, but Moscow denies that it targets civilian facilities.

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