The clashes in Baquba are the closest yet to Baghdad.
The UK shut its embassy in Tehran in 2011 after a mob attacked it in response to economic sanctions.
A senior U.S. official said Obama had not yet decided on a course of action.
Secretary of State Kerry said Washington was "open to any constructive process" that might resolve the situation in Baghdad.
President Obama will send military personnel to Iraq to protect the U.S. Embassy in Baghdad. Will America engage deeper?
The market is responding to instability in Iraq, but the Kurdistan Regional Government seeks to bring stability.
Kurdish militia in Kirkuk has closed the border, fearing that ISIS militants may try to seep in disguised as refugees fleeing bombings.
Fear of the jihadist group is causing unlikely alliances, including a possible US-Iran relationship.
The government is forcing Internet service providers to knock more of Iraq offline in an attempt to stifle ISIS communication.
The Islamic State of Iraq and Syria posted graphic photos of hundreds of executed soldiers.
Tal Afar, about 37 miles from the Syrian border, is a key city now under ISIS control.
"The reality is, U.S. and Iranian interests and goals do not align in Iraq," McCain said.
Syrian helicopters dropped the bombs in rebel-held areas of Aleppo.
The Islamic State of Iraq and Syria shipped jihadists to the Middle East from Spain, according to the country's interior ministry.
The captions on the photos said “hundreds have been liquidated” and showed grisly images of dead soldiers.
Tal Afar is a short drive west from Mosul, the north's main city.
U.S. Senator Lindsey Graham says Washington needs Iran's involvement to prevent a government collapse in Iraq.
Half a mile from an outpost waving the black flag of jihad between Baghdad and Kurdistan, normal life has stopped.
The Iraqi military has reportedly stopped the advance of ISIS north of Baghdad, but the US is moving personnel out.
Some staff members at the American Embassy in Baghdad will be relocated.
Baghdad residents are heartened for what they interpret as promises of help from the U.S. and Iran.
Syria is not only back on a campaign against ISIS, it is working directly with the Iraqi government.