BAGHDAD (Reuters) - Iraq said on Wednesday it was troubled by reports that Islamic State militants were smuggling oil to export markets and warned the purchase of such supplies could help the group fund its operations.

Iraq reiterated that only the Ministry of Oil was authorized to carry out sales - an apparent swipe at the Kurdish region - and buyers who dealt with other parties risked punishment such as sanctions.

Islamic State has seized five oil fields in the north since it arrived in June from Syria, prompting Iraq's U.S.-funded soldiers to flee.


(Writing by Michael Georgy, editing by John Stonestreet)