Despite airstrikes and heavy bombardments from western militaries, led by the United States, as well as attacks from various Middle Eastern countries, the Islamic State continues to demonstrate a stubborn persistence.
Unlike infamous terrorist groups like Al Qaeda, the Islamic State (or ISIS) has done something extraordinary – it is actually holding large swathes of territory in Iraq and Syria, acting as a functional state. Related: Current Oil Price Rally Will Fizzle Out Say Analysts
That is made possible by an illicit trade in oil. The FT reported on the oil operations of ISIS, which included engineers, managers, and skilled workers. According to the report, ISIS sells somewhere on the order of 34,000 to 40,000 barrels of oil per day, earning around $1.5 million daily.
Much of the production occurs in Syria’s east, where the country’s oil fields are located, along with some oil fields in Iraq’s Kirkuk province. After seizing the fields in 2014, the FT says that ISIS had engineers ready to work on the oil fields and bring them into operation almost immediately. Related: Oil Sands Down But Far From Out
While illicit trade in oil is perhaps understandable, what is truly surprising is the degree to which ISIS’ operations resemble an ordinary national oil company. The group recruits engineers, offers competitive salaries, and “encourages prospective employees to apply to its human resources department,” according to the FT.
The group has even organized distribution with a network of oil traders, where at one site traders line up in a 6-kilometer queue, and present official documents, which are then entered into a database. The traders are then told when they can return for the next purchase. Oil traders buy the oil at somewhere between $25 and $30 per barrel and subsequently sell the oil to refineries or cities further away, often at double or triple the price. Related: Iran Could Trigger A Resource War On Several Fronts Other Than Oil
However, the militant group’s success with oil fields may not be a long-term lifeline as the Iraqi army retook many of the fields earlier this year. Also, Syria’s oil fields are declining and ISIS, despite their technical and managerial prowess, do not have the technology to revive production. Ultimately, oil won’t be able to fuel the group over the long-term. But for now, it is allowing the militant group to maintain a grip on parts of Syria and Iraq, despite the barrage from a wide range of global military powers.
By Charles Kennedy of Oilprice.com
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