President Barack Obama warned the killers of Steven Sotloff that 'justice will be served', as US officials confirmed that a video showing the American journalist's execution is authentic.

Islamic State jihadists released footage showing Sotloff, a 31-year-old freelance journalist abducted in Syria last year, being beheaded by a masked militant.

"The prayers of the American people are with the family of a devoted and courageous journalist Steven Sotloff," Obama said speaking in Estonia.