Theoretically, oil is black gold for ISIL, but having it and monetising it are two different things.
Industry experts say the oilfields and refineries it controls are being operated by a scratch crew of semi-skilled workers, with best estimates that it is moving around 80,000 barrels a day, which is about a third of the pre-takeover output. Some of it has been refined into fuel.
There are reports that it is being smuggled into Turkey, Iran and northern Syria, but all the governments involved vehemently deny any involvement in that trafficking.
Luay al-Khatteeb, Director of the Iraq Energy Institute and a senior advisor to the Baghdad government on energy policy, told euronews: “The volumes are very much limited in numbers, we’re talking about 70,000 to 80,000 barrels, possibly at best case scenario trucked over the border, even though the Turkish government is doing its best to control the border, but it is very difficult terrain, we are talking about 1,200 kilometres of shared borders between Turkey and Syria and Iraq.”
The smuggling operation is very inefficient and the oil is being sold at a deep discount – $25 a barrel or less – to middle-men with their own tanker trucks.
It is sufficient to underwrite ISIL’s war though not enough to have an impact on international oil prices according to Luay al-Khatteeb: “Any trades of these smuggled quantities are very much handled through local smuggling networks, these are illicit deals and I don’t see any involvement of international brokers at this level. If it disappears it has zero impact on the 88 to 90 million barrels traded every day.”
In the wider world of oil trading the dozen or so fields that ISIL controls in eastern Syria and northern Iraq are a drop in the barrel, but it is a major part of their financial lifeline; however that revenue stream is very vulnerable to the US and their allies stepping up attacks on those fields and the nearby refineries.
Washington is also reportedly planning to increase pressure on neighbouring governments to stop the flow of illicit oil.