Economy, Domestic Economy
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IS Terror and Oil

IS Terror and Oil IS Terror and Oil

The so-called Islamic State (IS) extremists earned up to $3 million in September alone just from illegal oil sales, according to US intelligence officials and experts, making the militants richer than any other terrorist group in history. But how on earth is it feasible to smuggle crude in large scale under the nose of the world’s most sophisticated armies and intelligence services?

According to analysts, eleven oil fields in Iraq and Syria are under control of the terrorist group. Over the summer, IS was pumping between 40,000 to 80,000 bpd of crude oil from the wells it controls in the Deir al-Zor and Hasaka provinces in Syria, according to a report by Reuters. On a good day, IS will be able to produce 200,000 bpd of crude oil – a level that makes the group the 40th largest among more than 100 oil producers in the world, according to the US Department of Energy.   

The terrorists are selling oil at discount prices of about 25% to 75% of the market prices. IS terrorists, who have also seized oil fields and refineries in Kirkuk province in northern Iraq, are selling oil on the black market for a price of as low as $20 per barrel, Muwafaq Taha Izz al-Din al-Houri, director of the public debt department at the Finance Ministry, told RIA Novosti news agency in November. The price was four times lower than that in the official market at the time.

The current price of oil sold by IS ranges between $20 and $40, experts familiar with the issue told the Financial Tribune.

 Oil Management

IS members are not simply militants. They are very good at establishing a bureaucratic government which can manage oil sales very well. They have set up an “oil department” which is responsible for managing the logistics and financial operations of trading oil. To this end, the oil department is headhunting for “ideologically suitable” oil industry professionals in the region to assist them in managing the operation in oil fields and refineries the terrorists steal from Iraq and Syria.

The group’s oil department has used local businessmen to send convoys of up to 30 trucks carrying oil from IS-run wells through parts of Syria in broad daylight without being targeted by airstrikes. The terrorist group has allowed convoys to quickly pass through its checkpoints and even urged local businessmen to build stockpiles, just in case oil wells are hit.

The threat of airstrikes has even pushed IS to use its oil wealth more effectively to shore up its local tribal support base. The group is exporting oil via old-established networks to the bordering countries and private refineries.

The terrorists also benefit from the US and Iraqi decision not to bomb the oil wells. Until now, the US and Iraqi raids have targeted some small makeshift oil refineries, run by locals in eastern areas controlled by IS, but not the wells the group has under its control. Analysts believe US-led forces avoid hitting hard the oil installations because strikes could hurt civilians more than the militants and could radicalize the local population.

  Need for Global Determination

The IS oil business is hard to track, as oil is being sold to countries bordering IS-controlled territory and whitewashed (re-sold by those countries or used in their refineries’ facilities). Last month, the Kurdistan Regional Government (KRG) in the Iraqi Kurdistan ordered the arrest of 360 suspects on charges of oil dealing with IS, BasNews reported. The suspects are accused of buying oil from the terrorists in Kirkuk province and then smuggling it to the neighboring countries.

The ugly truth stands out by comparing the IS case with the western governments’ determination in blocking Iraqi oil export and oil-for-food program (OIP).

Seemingly the US and its allies are not yet determined to stop the terrorist group from growing bigger . Some analysts believe while world powers are wasting time on political games, IS terrorists are empowering their establishments using huge oil revenues.

Billions of dollars in the hands of such terrorists, who have so far killed thousands of civilians in Iraq and Syria, will make the world a more dangerous place to live unless western states and regional countries come up with a decisive decision to eradicate the rich group.

Financialtribune.com