Exactly Who Is Buying Oil From The Islamic State?

NEW DELHI: Russia’s Ministry Of Defence is out to prove links between Turkey and the Islamic State’s oil trade, alleging that Turkish President Recep Tayyip Erdogan and his family are benefiting from the illegal smuggling of oil from territory held by the militant group. Turkey has vehemently denied the charge, with coalition partner the United States going on record to say that the amount of IS-controlled oil that makes it to Ankara is “insignificant.”

What we do know is that the Islamic State (also known as Daesh) is making about $50 million a month from selling crude from oilfields under its control in Iraq and Syria. The oil sales are the extremist group’s largest single source of continual income, and a key reason they have been able to maintain their rule over their self-declared "caliphate."

With $50 million at play, someone must be buying Daesh oil, but the question is: who?

According to some estimates, Israel is the largest purchaser of oil from land controlled by Daesh, with an August report stating that Israel procured 75 percent of its oil from parts of Iraq and Syria that are controlled by Daesh. More than a third of such exports go through the port of Ceyhan, which the report described as a “potential gateway for ISIS-smuggled crude.”

Another report in Al Araby detailed how this oil made it from Daesh territory to Israel. “IS sells Iraqi and Syrian oil for a very low price to Kurdish and Turkish smuggling networks and mafias, who label it and sell it on as barrels from the Kurdistan Regional Government. It is then most frequently transported from Turkey to Israel, via knowing or unknowing middlemen, according to al-Araby's investigation,” the report states.

"After the oil is extracted and loaded, the oil tankers leave Nineveh province and head north to the city of Zakho, 88km north of Mosu,” a colonel quoted in the report explains. "After IS oil lorries arrive in Zakho - normally 70 to 100 of them at a time - they are met by oil smuggling mafias, a mix of Syrian and Iraqi Kurds, in addition to some Turks and Iranians.” "The person in charge of the oil shipment sells the oil to the highest bidder.”

Here’s a chart that explains the movement of Daesh controlled oil:

Turkey, therefore, is a big player according to the analysis -- a point corroborated by the Russians. This week, the Russian Ministry of Defence released images purportedly showing the movement of Daesh oil through Turkish borders.

The fact that the trade is flourishing is also evinced by a report by the Associated Press. “Speaking to The Associated Press in Washington, he [an unnamed senior US official] said international actors in the region were intentionally or unintentionally aiding this effort and called IS' management of its oil fields "increasingly sophisticated," something that has helped the group slow down the degradation of its infrastructure from U.S. bombing raids. He spoke on condition of anonymity because he was not authorized to talk to the press.

IS sells the crude to smugglers for discounted prices, sometimes $35 per barrel but as low as $10 a barrel in some cases, compared to just under $50 a barrel on international markets, four Iraqi intelligence officials told the AP in separate interviews. The smugglers in turn sell to middlemen in Turkey, they said. The oil used to be smuggled in fleets of giant tankers but, fearing airstrikes by the U.S.-led coalition, smaller tankers are being used now.

The Islamic State group is believed to be extracting about 30,000 barrels per day from Syria, smuggled to middlemen in neighboring Turkey. In Iraq, they produce around 10,000-20,000 barrels per day, mostly from two oilfields outside Mosul, Ibrahim Bahr al-Oloum, a member of Iraq's parliamentary energy committee and a former oil minister, told the AP. But he said much of the Iraqi production is not sold and instead sent to Syria to makeshift refineries the group has set up to produce fuel products.

In total, the group is believed to make $40-$50 million a month from sales, the Iraqi officials said. A report by the Islamic State's Diwan al-Rakaaez — its version of a Finance Ministry — seen by the AP in Baghdad shows that revenues from oil sales from Syria alone last April totaled $46.7 million. The IS "finance ministry" report put at 253 the number of oil wells under IS control in Syria, saying 161 of them were operational. Running the wells were 275 engineers and 1,107 workers, it said.”

It’s not just Turkey and Israel, Syrian President Bashar al Assad has long been accused of buying oil from territory controlled by Daesh through middle men. And it doesn’t end there.

In an interview with CNN, Luay al-Khatteeb, the director of the Iraq Energy Institute said that “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… “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.”

Every country, on its part, however denies that it is buying oil produced in IS controlled territory. Yet, the group manages to make about $3 million a DAY in revenue from oil sales…