Islamic State militants posted a video on Tuesday that purported to show the beheading of American journalist James Foley in revenge for U.S. air strikes against the insurgents in Iraq.
The video, titled "A Message to America," also showed images of another U.S. journalist, Steven Sotloff, whose life Islamic State said depended on how the United States acts in Iraq.
The gruesome video presented President Obama with bleak options that could define America's involvement in Iraq and the public reaction to it, potentially dragging him further into a conflict he built much of his presidency on ending.
Obama held back from making a public statement about the beheading until the video could be formally authenticated.
"If genuine, we are appalled by the brutal murder of an innocent American journalist and we express our deepest condolences to his family and friends," White House National Security Council spokeswoman Caitlin Hayden said in a statement.
Other political leaders were swift to react.
British Prime Minister David Cameron interrupted his holiday to return to London to lead the hunt to identify the man shown killing Foley, who spoke on the video with a British accent.
Foreign Secretary Philip Hammond said he was not surprised to hear the British accent and that large numbers of British nationals were fighting in Iraq and Syria.
"Our intelligence services will be looking very carefully on both sides of the Atlantic at this video to establish its authenticity, to try to identify the individual concerned and then we will work together to try to locate him," Hammond told Sky news.
French President Francois Hollande called for an international conference to discuss how to tackle Islamic State.
Iraqi Foreign Minister Hoshiyar Zebari urged the world to back his country against Islamic State, which he described as a threat to the world, not just to the minority ethnic groups whose members it has killed in northern Iraq.
Germany and Italy said they were ready to send arms to bolster the military capabilities of Iraqi Kurds fighting the Islamic State militants.
The video's grisly message was unambiguous, warning of greater retaliation to come against Americans following nearly two weeks of U.S. air strikes that have pounded militant positions and halted the advance of Islamic State, which until this month had captured a third of Iraq with little resistance.
Foley, 40, was kidnapped by armed men on Nov. 22, 2012, in northern Syria while on his way to the Turkish border, according to GlobalPost, a Boston-based online publication where Foley had worked as a freelancer. He had reported in the Middle East for five years and had been kidnapped and released in Libya.
Sotloff, who appeared at the end of the video, went missing in northern Syria while reporting in July 2013. He has written for Time among other news organizations.
On Facebook, Foley's mother Diane Foley said: "We have never been prouder of our son Jim. He gave his life trying to expose the world to the suffering of the Syrian people.
"We implore the kidnappers to spare the lives of the remaining hostages. Like Jim, they are innocents. They have no control over American government policy in Iraq, Syria or anywhere in the world."
The video was posted after the United States resumed air strikes in Iraq this month for the first time since the end of the U.S. occupation in 2011.
Islamic State, which has declared a caliphate in the parts of Iraq and Syria it controls, opened the video with a clip of Obama saying he had authorized strikes in Iraq.
The words "Obama authorizes military operations against the Islamic State effectively placing America upon a slippery slope towards a new war front against Muslims" appeared in English and Arabic on the screen.
It showed black and white aerial footage of air strikes with text saying "American aggression against the Islamic State."
A man identified as James Foley, his head shaven and dressed in an orange outfit similar to uniforms worn by prisoners at the U.S. military detention camp in Guantanamo, Cuba, is seen kneeling in the desert next to a man standing, holding a knife and clad head to toe in black.
"I call on my friends, family and loved ones to rise up against my real killers, the U.S. government, for what will happen to me is only a result of their complacency and criminality," the kneeling man says.
The man next to him, in a black mask, speaks in a British accent and says, "This is James Wright Foley, an American citizen, of your country. As a government, you have been at the forefront of the aggression towards the Islamic State."
"Today your military air force is attacking us daily in Iraq. Your strikes have caused casualties amongst Muslims. You are no longer fighting an insurgency. We are an Islamic army, and a state that has been accepted by a large number of Muslims worldwide."
Following his statement he beheads the kneeling man. At the end of the video, words on the side of the screen say, "Steven Joel Sotloff," as another prisoner in an orange jumpsuit is shown on screen. "The life of this American citizen, Obama, depends on your next decision," the masked man says.
Hostage crises have plagued U.S. presidents over the years.
Jimmy Carter's presidency sagged under the weight of the Iran hostage crisis when Americans were held captive for 444 days. Ronald Reagan's bid to get American hostages freed from Lebanon led to an arms-for-hostages Iran-Contra scandal that plagued his second term.
University of Virginia political scholar Larry Sabato said the current situation was more like the beheading of American journalist Daniel Pearl by al Qaeda leader Khalid Sheikh Mohammed in 2002. He said it could help bolster a growing perception among Americans that the United States will have to be more aggressive in dealing with Islamic State militants.
Syria has been the most dangerous country for journalists for more than two years. At least 69 other journalists have been killed covering the conflict there and more than 80 journalists have been kidnapped in Syria.
The U.S.-based Committee to Protect Journalists estimates that approximately 20 journalists are currently missing in Syria. Many of them are believed to be held by Islamic State.
Islamic State also released a video on Tuesday that gave a strong indication it might try to strike American targets. The video with the theme "breaking of the American cross" boasts Islamic State will emerge victorious over "crusader" America.
It followed a video posted on Monday, warning of attacks on American targets if Washington strikes against its fighters in Iraq and Syria.
As well as taking territory, Islamic State has seized a number of oil wells in northern Iraq. The government in Baghdad said it was troubled by reports that Islamic State was smuggling oil to export markets and warned the purchase of such supplies could help the group fund its operations.
Additional reporting by Steve Holland in Edgartown, Mass., Stephanie Nebehay in Geneva, Oliver Holmes and Tom Perry in Beirut, Sabine Siebold in Berlin, Costas Pitas and William James in London, and John Irish in Paris; Writing by Giles Elgood
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