The Islamic State is earning about $2 million a day, or $800 million a year, selling oil on the black market, IHS Inc. estimated.

The terrorist group is producing 50,000 to 60,000 barrels a day, according to an e-mailed release Monday from the Englewood, Colorado-based information company. It controls as much as 350,000 barrels a day of capacity in Iraq and Syria.

Extremist groups typically reply on foreign donations that can be squeezed by sanctions, diplomacy and law enforcement. By tapping the region’s oil wealth, Islamic State, the group that beheaded American journalist James Foley, resembles the Taliban with oil wells.

“This is financing and fueling a lot of their activities, military and otherwise,” Bhushan Bahree, a co-author of the report, said today in an interview. “For argument’s sake, let’s say their capacity were cut by half. They’ll still have $400 million coming in. This is many times more than any other source of funding we know of.”

Islamic State consumes about half its production and sells the rest for $25 to $60 a barrel, according to the report. That estimate is in line with those of U.S intelligence officials and anti-terrorism finance experts.

Unsuspecting buyers

Bombing oil-field pump stations may be the best way to cut off the flow of oil since they are stationary and difficult to replace, Bahree said. U.S.-led air strikes haven’t eliminated truck-mounted refineries that Islamic State uses to produce fuel for its war machines and to supply civilians within the territory it controls.
Trafficking has encouraged middlemen to buy crude and smuggle it into Turkey, Jordan or Iraq, where it is blended with other oil and sold to unsuspecting buyers, according to the report.

“It is very hard to intercept,” Bahree said. “There has probably been smuggling of all sorts of things in this place for thousands of years.”

When Iraq’s regional Kurdish government tried to police long-established smuggling routes along a 1,000-kilometer (621-mile) border with what is now Islamic State territory, traffickers found new ones, he said. (Source: Bloomberg)

Story Date: October 21, 2014