Sana news agency said Syrian and Iraqi forces had met on the border and the town had been surrounded.
A US -backed coalition has supported a rival campaign in Syria by the Syrian Democratic Forces (SDF), an alliance of Kurdish and Arab militias that have pushed Islamic State from much of the country's north and east.
The Syrian army, alongside its Lebanese military ally Hezbollah and other Shia militias, and backed by Iran and Russian Federation, have seized swathes of central and eastern Syria in an advance against Islamic State this year.
Baghdadi took control of what was then known as the Islamic State of Iraq in 2010 after the death of its former leader.
Iraqi forces backed by the USA -led coalition drove IS from Qaim and surrounding areas last week, in what coalition officials said marked the end of the conventional war against the extremist group in Iraq.
When ISIS first emerged as a major threat in Iraq and Syria in 2014 the militants were riding around in tanks and gathered in large formations, presenting visible targets for the coalition.
The Iraqi Popular Mobilization Forces (PMF), an alliance of militias, denied a report by the Observatory that it had crossed the Syrian border and was attacking Albu Kamal.
Iraqi Prime Minister Haider Al-Abadi gave instructions to his country's armed forces on Tuesday to deal with any terrorist attack, even if it arises from within Syria, Anadolu has reported. Both the Syrian and Iraqi militaries, along with their allied militias and respective global sponsors, have largely defeated ISIS, but parts of Syria remain under rebel and Kurdish control.
Elizabeth II has transferred about $ 13 million. offshore
A document outlining a limited partnership agreement with Dover Street VI Cayman Fund LP naming the Duchy of Lancaster. But the revelations will no doubt raise questions about whether the monarch should be investing in offshore finance.
What is MLB Going to do About Yulieski Gurriel?
Gurriel, a 33-year-old from Cuba, made the gesture shortly after homering to start Houston's four-run second inning. If the Major League Baseball imposes no punishment on Gurriel for them, the implicit message will be that they are.