I have to admit that I am a news junkie. So my TV was glued to CNN on the day of the Paris terrorist attack. During its coverage, one of the CNN commentators mentioned that ISIS makes about $2 million a day in oil revenue.  That piqued my curiosity and decided to find out more about ISIS oil operation.

Oil as a Strategic Weapon

According to FT, ISIS oil strategy has been long in the making since the group emerged in Syria in 2013.The group saw oil as a funding source for their vision of an Islamic state, and identified it as fundamental to finance their ambition to create a caliphate.ISIS controls most of Syria’s oil fields where it created a foothold in 2013.Crude is the militant group’s biggest single source of revenue.

Read: Obama Put Taiwan on ISIS Radar

ISIS has derived its financial strength from being the monopoly oil producer in a huge captive market in Syria and Iraq. Despite a US-led international coalition to fight ISIS, FT describes a “minutely managed” sprawling ISIS operation akin to a national oil company in just two years with an estimated crude production of 34,000-40,000 barrels per day (bpd).   

$1.5 million a Day to Fund The Terrorist Group

The group sells most of its crude directly to independent traders at the wellhead for $20-$45 a barrel earning the group an average of $1.5 million a day.Without being able to export, ISIS brought hundreds of trucks and started to extract the oil and transport it.According to an FT interview of a local sheikh, an average of 150 trucks is filled daily with about $10,000 worth of oil per truck.  Most traders can expect to make a profit of at least $10 per barrel.  

Son of Turkey’s President Is In on ISIS Oil?

The arbitrage had the potential to go a lot more than $10 a barrel when oil prices were high.  Russia has accused Turkey of buying ISIS oil (allegedly the son of Turkey’s President is involved, and also allegedly the U.S. is aware of it), reselling it to Japan and Israel for huge profits.  Smugglers have been using boats, pumps, carrying on foot, by donkey or horse.  Some see the oil production from ISIS as a contributing factor to the global oil glut pushing down oil prices.