Islamic State militants likely used mustard agent against Kurdish forces in Iraq this week, senior U.S. officials said Thursday, in the first indication the militant group has obtained banned chemicals.

The officials said Islamic State could have obtained the mustard agent in Syria, whose government admitted to having large quantities in 2013 when it agreed to give up its chemical-weapons arsenal.

The use of mustard agent would mark an upgrade in Islamic State’s battlefield capabilities, and a worrisome one given U.S. intelligence fears about hidden caches of chemical weapons in Syria, where Islamic State controls wide swaths of territory. […]