"IS has taken parts of the Jazal oilfield, but the regime is preventing it from taking the rest," Observatory chief Rami Abdel Rahman told AFP.
He said the IS advances had halted production at the field in central Homs province, with employees pulling out as the fighting drew near.
The Observatory said IS had also seized the town of Jazal by the oilfield, and the extremist group issued a statement on social media claiming to have "liberated" the town.
Abdel Rahman said Jazal, which previously produced around 2,500 barrels per day (bpd), was the last major oilfield under government control in Syria, though the regime has access to oil being pumped by Kurdish forces in the northeast.
The Jazal field has changed hands before, with IS briefly capturing it in June before regime troops retook it.
Official oil production in Syria has plummeted since the conflict began in March 2011.
By the end of 2014, it was down to 9,329 bpd from a pre-war output of 380,000 bpd.
IS has captured many of Syria's most productive oilfields, predominantly in the eastern province of Deir Ezzor.
In the northeastern province of Hasakeh, Kurdish forces control the major Rmeilan field and are refining crude there for the first time.
COMMENTS
Comments are moderated and generally will be posted if they are on-topic and not abusive.
For more information, please see our Comments FAQ