• 3 minutes e-car sales collapse
  • 6 minutes America Is Exceptional in Its Political Divide
  • 11 minutes Perovskites, a ‘dirt cheap’ alternative to silicon, just got a lot more efficient
  • 5 days The United States produced more crude oil than any nation, at any time.
  • 10 days e-truck insanity
  • 9 days Oil Stocks, Market Direction, Bitcoin, Minerals, Gold, Silver - Technical Trading <--- Chris Vermeulen & Gareth Soloway weigh in
  • 5 days How Far Have We Really Gotten With Alternative Energy
  • 8 days James Corbett Interviews Irina Slav of OILPRICE.COM - "Burn, Hollywood, Burn!" - The Corbett Report
  • 8 days The European Union is exceptional in its political divide. Examples are apparent in Hungary, Slovakia, Sweden, Netherlands, Belarus, Ireland, etc.
  • 10 days Biden's $2 trillion Plan for Insfrastructure and Jobs
  • 10 days "What’s In Store For Europe In 2023?" By the CIA (aka RFE/RL as a ruse to deceive readers)

Breaking News:

Traders Place Bets On $250 Oil

Chris Dalby

Chris Dalby

More Info

Premium Content

Who Is Buying The Islamic State’s Illegal Oil?

Who Is Buying The Islamic State’s Illegal Oil?

In June 2014, computer files captured from a courier for the Islamic State shortly after the fall of Mosul revealed that the group had assets of $875 million, largely gained in the sacking and looting of Mosul and its central bank.

The size of the group’s bank account has now risen to an estimated $2 billion dollars, thanks in part to revenues from ransom paid for kidnapped foreigners and more pillaging. However, oil remains the group’s primary source of income.

The 11 oil fields that IS controls in Iraq and Syria have made it a largely independent financial machine. Reports show that IS-controlled fields in Iraq produce between 25,000 and 40,000 barrels of oil per day, at an estimated value of approximately $1.2 million, before being smuggled out to Iran, Kurdistan, Turkey and Syria.

Related: Islamic State’s Ultimate Goal: Saudi Arabia’s Oil Wells

That doesn’t account for revenue from oil fields that IS has held much longer in Syria, which take the Islamist group’s daily profit to just under $3 million.

But if the regional narrative of IS’s rise is to be believed, the group is universally loathed. How, then, is it so readily finding customers to buy its oil abroad?

Oil smuggling is hardly new in Iraq and Syria -- Iran and Turkey have been major conduits for illegal oil exports since the days of Saddam Hussein. Those smuggling rings are still very active, and are now working with IS and contributing to its exploding wealth.

In an interview with CNN, Luay al-Khatteeb, the director of the Iraq Energy Institute, explained that “IS smuggles the crude oil and trades it for cash and refined products, at a refined price,” thanks to its own refineries in Syria.

One important reason that smugglers have been so eager to work with IS is that the terrorist group sells its oil on the cheap. A barrel of oil that would ordinarily sell for over $100 can be discounted as much as 75 percent. But it’s still a profitable sale for IS, as the money it loses from such a discount is more than made up for by the readiness of customers to buy its oil and the plethora of routes through which it can export it.

“The crude is transported by tankers to Jordan via Anbar province, to Iran via Kurdistan, to Turkey via Mosul, to Syria's local market and to the Kurdistan region of Iraq, where most of it gets refined locally,” Khatteeb explained. “Turkey has turned a blind eye to this and may continue to do so until they come under pressure from the West to close down oil black markets in the country's south.”

One of the more terrifying aspects of IS’s newly found wealth is that it is no longer based on the traditional donor model, in which rich sympathizers in the Middle-East and the West pour generous funds into training and capacity-building of fresh jihadists. IS’s goal has always been to form a caliphate, and although no country would recognize it as such, it is running the territory it conquers as a state, albeit through illegal means; IS is pumping, refining and selling oil, just like any other petro state.

What’s more, now that it controls fertile provinces in western Iraq, such as Anbar and Nineveh, the group also now sits on 40 percent of Iraq’s wheat crop, and can force farmers to deal only with them, sometimes for no pay. Baghdad is now worrying about a medium-term food crisis, since 20 percent of its stores are in IS-held territory and thousands of farmers have fled.

Related: Eliminating The Scourge Of Islamic State In Iraq

Clearly, there’s a stark difference between the financial operations of IS and those of Al-Qaeda and other international terrorist organizations. U.S. President Barack Obama recently admitted that his administration and the intelligence community had underestimated IS, which now looks like a nightmare to Washington.


The group has captured American military-grade weaponry and equipment and freed from jail former soldiers who know how to use it. It is independently rich but operates outside the normal fiscal system, which means conventional financial sanctions can’t touch it. It has set up its own illicit trading networks in an area it controls with an implacable totalitarianism. It effectively combines political terror, religious zealotry and financial muscle to bend local populations to its will.

IS’s powerful economic engine may not guarantee that it will one day peacefully rule the territory it claims, but $3 million a day more than assures that it can continue financing its fight to do so.

By Chris Dalby of Oilprice.com

More Top reads From Oilprice.com:

Download The Free Oilprice App Today

Back to homepage

Leave a comment
  • pop on September 30 2014 said:
    funny how first we (US et al) conducted a totally immoral and illegal war against Iraq (let alone all the other illegal military actions of the US)

    then, when the result of that expensive and utterly corrupt war results in a new power group trying to emerge we call them criminals and paint all their actions as extremes

    I say - good on them if they can by any means bring a destroyed nation together - and i mean by any means because whatever means they might use they can't be any less murderous and destructive than ours

  • Mule on October 01 2014 said:

    I'll be among the first to agree with you and put the black hat on the US for its shortsightedness and interference in a historically unstable region (to put it lightly). Trillions of dollars lost and the emergence of apparently the worst terror state imaginable according to the articles details. Merciless, armed, and worst of all financially healthy.

    Where your argument runs of the tracks is not just the comparison between the US, a bloated over-indulgent super power trying to play world police, and ISIS, a fanatic band of 7th century zealots bent on force feeding the planet its insanity and who openly and actively target the US and its allies, but the insinuation that ISIS is in fact doing noble work! One continuously fumbles the ball while it tries unsuccessfully to carve out stability, and the other is launching an all out attack against pretty much every decision made by progressive society in the last 1000 years.

    And you characterize this group of deviant's actions as an attempt to "bring a destroyed nation together." Wow... Wake up and smell what you're shoveling pal
  • Lee James on October 01 2014 said:
    Agreed, Mule -- from one extreme to the other, in the heart of the Middle East.

    The place is destined to become a waste land, and I see once again that oil plays a lead role!

    I realize that it may be simplistic to attribute so much to resource exploitation, but geopolitical (and environmental) problems from oil seem to dog us all.
  • kaz on October 02 2014 said:
    you must be mistaken. ISIS could not have stolen Iraq's oil. George w bush stole Iraq's oil. we know that because our dear liberals have been chanting that liberal truth for over 10 years.
  • J on October 03 2014 said:
    Who do you think they're selling their oil to? The U.S. and the west; looks like the U.S. has found a clever way of buying oil at a discounted price. Isis is being played by the west, they are the creation of the very thing they are fighting...
  • Benji543666666664 on February 10 2015 said:
    How can Turkey, Iran and Jordan be killing ISIS - when they are trading with them and also providing weapons and training, funded by the Saudis and the US?
    The sheer amount of weapons, missiles, transport vehicles, and bullets - would need replenishing by 100's of DAILY container loads. Where do they come from?When they call out for people to join them - how confident are they, that they will supply them with weapons! Furthermore, who is providing them with satellite information and intelligence and the sheer logistics of managing all this, from a rag tag army of kids, with no prior field experience?
    And finally, why are all these armament have made in USA written on them?

    We can't open a bank account, or get internet, or studio facilities to make lavish videos, if we have no ID. Where do these guys bank. You cannot trade thousands or tankers worth of oil - unless we are also in on the act and taking a cut.

    No wonder Obama and Cameron said it could take decades to remove them - before even starting to fight them! For they cannot live without the cut!

Leave a comment

EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News