Barack Obama said the US was prepared for “targeted and precise military action, if and when… the situation on the ground requires it”, but added that US troops would not fight in Iraq.
He went on to insist there was “no military solution” and urged the Shia-led Iraqi government to be “inclusive”.
Iraq has asked the US for air strikes against the Sunni militants.
The gunmen – spearheaded by the jihadist Islamic State of Iraq and the Levant (ISIS) – have made major territorial gains in the past 10 days.
Barack Obama said it was not the US’s place to choose Iraq’s leaders.
His statement came after a day in which fighting continued for control of the country’s biggest oil refinery.
Officials insisted security forces were “in full control” of the Baiji refinery, about 130 miles north of the capital Baghdad. But militants led by ISIS have surrounded the facility.
For several days, production has been halted at Baiji refinery, which supplies much of the country’s domestic fuel.
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