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Observatory head Rami Abdel Rahman told AFP the rebels regained full control of Albu Kamal after reinforcements poured in.
ISIL withdrew to the T2 oil site, 60 kilometres (35 miles) southwest of the town and where a Syria-Iraq pipeline runs, he said, after executing seven fighters of a rival Islamist brigade.
The clashes have prompted soldiers on the Iraqi side of the border to reinforce their positions.
The border crossing itself on Syria's side remains in the hands of the mainstream rebel Free Syrian Army, said a rebel chief and an AFP reporter on the Iraqi side who saw the FSA flag flying over it.
With their attack on Albu Kamal, ISIL fighters wanted to link up with their comrades over the border in Iraq, said Abdel Rahman.
Iraqi troops put up blast walls and sand berms on their side of the crossing as a precaution, the AFP correspondent reported.
Albu Kamal has been under the control of fighters opposed to the Damascus regime since November 2012, but Al-Nusra and its allies forced out former ISIL allies in heavy fighting in late February.
Thousands were killed in battles in several regions of Syria in January and February pitting ISIL against its rivals and nominal allies in the anti-Assad revolt.
The Euphrates valley town of Albu Kamal had a population of some 70,000 before the start of the Syrian conflict which the Observatory says has cost more than 150,000 lives since March 2011.
Syrian troops now control just one official crossing on the Iraqi border -- Al-Tanaf/Al-Walid, on the main highway to Baghdad.
A third crossing, Yarabiyah/Rabia in the northeast, is held by Kurdish militia.
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ISIL withdrew to the T2 oil site, 60 kilometres (35 miles) southwest of the town and where a Syria-Iraq pipeline runs, he said, after executing seven fighters of a rival Islamist brigade.
The clashes have prompted soldiers on the Iraqi side of the border to reinforce their positions.
The border crossing itself on Syria's side remains in the hands of the mainstream rebel Free Syrian Army, said a rebel chief and an AFP reporter on the Iraqi side who saw the FSA flag flying over it.
With their attack on Albu Kamal, ISIL fighters wanted to link up with their comrades over the border in Iraq, said Abdel Rahman.
Iraqi troops put up blast walls and sand berms on their side of the crossing as a precaution, the AFP correspondent reported.
Albu Kamal has been under the control of fighters opposed to the Damascus regime since November 2012, but Al-Nusra and its allies forced out former ISIL allies in heavy fighting in late February.
Thousands were killed in battles in several regions of Syria in January and February pitting ISIL against its rivals and nominal allies in the anti-Assad revolt.
The Euphrates valley town of Albu Kamal had a population of some 70,000 before the start of the Syrian conflict which the Observatory says has cost more than 150,000 lives since March 2011.
Syrian troops now control just one official crossing on the Iraqi border -- Al-Tanaf/Al-Walid, on the main highway to Baghdad.
A third crossing, Yarabiyah/Rabia in the northeast, is held by Kurdish militia.
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