Washington: Current oil production by the Islamic State in the Levant (ISIL) is estimated to be worth $800 million per year, equivalent to more than $2 million per day, according to new estimates by IHS (NYSE: IHS), the leading global source of information and analytics.
The terrorist group, also known as the Islamic State of Iraq and Syria (ISIS), the Islamic State and Daesh, is able to generate significant revenues despite producing only a fraction of the pre-war oil capacity of the territory it controls and selling what oil it does produce at a steep discount on the black market.
“Oil fuels ISIL’s war machine, notably including the military vehicles vital to its movements and fighting capabilities,” a recent IHS Energy analysis said.
“Oil directly finances ISIL’s myriad activities and encourages the activities of middlemen who sell, transport and export the oil and thus have a vested interest in ISIL.”
ISIL currently controls as much as 350,000 barrels per day (b/d) in pre-war capacity in Iraq and Syria but IHS estimates that it is only able to produce between 50,000-60,000 b/d with the amount varying on a day-to-day basis. This fraction of pre-war capacity is the result of warfare, shut-ins and ISIL’s limited technical prowess operating the fields, IHS says.
The oil that ISIL sales on the black market—mostly via trucks through smuggling routes on the Turkish border—is sold at a steep discount at prices ranging from $25-$60 per barrel, with an average of $40 being a reasonable assumption, IHS estimates. This is compared to around $85 per barrel recently for Dated Brent, the international benchmark.
Future oil revenues growth for ISIL remains to be determined and will be heavily influenced by territories gained/lost in coming months, IHS says. In light of ongoing US-led airstrikes against ISIL, it is also unclear if the terrorist group has enough refining capacity—which currently consists mostly of simple mobile refineries that can be loaded and transported by truck—to meet its own needs.