Syria's army and its allies have encircled Daesh in the city of al-Mayadin, southeast of Deir al-Zor, in eastern Syria, a Syrian military source said on Sunday.
Al-Mayadin is one of the last strongholds of Daesh as it falls back upon the fertile area downstream of Deir al-Zor in the Euphrates valley and launches counter attacks in the central desert after losing swathes of territory this year.
"Units of our armed forces with the allied forces continue their advance on a number of fronts and axes in Deir al-Zor and its countryside… and encircle Daesh terrorists in the city of al-Mayadin," the military source said.
The army and its allies reached Deir al-Zor in September after a months-long offensive across the Syria desert, and have in recent weeks pushed down the Euphrates towards al-Mayadin.
However, counter attacks by Daesh in the central desert region have put pressure on the main supply road to Deir al-Zor from western Syria.
Syrian President Bashar al-Assad is backed in the war by Russia, Iran and Shia militias including Lebanon's Hezbollah, and its campaign against Daesh has mostly been on the west bank of the river.
A US-led coalition is also supporting a rival campaign against the militants, mostly on the east bank, where it is close to recapturing Raqqa, and has also advanced downstream to hold areas opposite Deir al-Zor.
US officials have previously said that Daesh had relocated some of its diminished command and propaganda structures to al-Mayadin as it was forced from territory elsewhere.