Report

Has the U.S. Turned Off the Islamic State’s Oil Spigot?

Airstrikes seem to have mauled a portion of ISIS's oil operations. That could hamstring its finances -- and its war machine.

AFP - Getty
AFP - Getty

Having control of oil helped make the Islamic State the richest terrorist group ever. That’s one reason that U.S. and allied airstrikes have hammered its oil operations since late September. But two weeks later, one big question remains: Is the U.S.-led campaign succeeding in strangling the Islamic State’s golden goose?

The terrorist group, also known as ISIS or ISIL, turned its control of oil fields in Syria and Iraq into a lucrative revenue stream. By some accounts, the group was earning as much as $2 million a day from the illicit sales of crude oil and refined products, which were smuggled across the border to Turkey in pipelines and trucks. The oil money, combined with other illegal businesses, made the Islamic State largely self-funded. But it also created a host of fresh vulnerabilities: oil infrastructure that U.S. and allied warplanes could target for destruction.

Two weeks after the beginning of the Pentagon’s campaign to degrade and destroy ISIS in Syria, the U.S. military’s Central Command says that it has hit some 16 mobile oil refineries, a key piece of ISIS’s ability to make money off the oil fields found in territory it has overrun.

But the Defense Department is not tracking the impact of those strikes on ISIS’s oil operations; that falls to the Treasury Department, which spearheads the fight against terror financing. A Treasury spokesperson said that it is too soon to make any formal estimate of how the military campaign has affected ISIS’s oil operations.

Still, rough estimates are available. The Pentagon said that each of those mobile refineries could churn out between 300 and 500 barrels a day of refined products such as diesel fuel. So airstrikes so far may have wiped out as much as 8,000 barrels a day of ISIS’s refining capacity — or almost half the 18,000 barrels a day of capacity that ISIS was believed to have at the peak of its expansion this summer.

Crippling that capacity could pay dividends for the United States and its Arab allies in two ways: by cutting into ISIS’s ability to make money, and by curtailing its own fuel supplies, which are needed to run military vehicles and meet civilian energy needs in the areas it controls.

"Taking half of that refined capacity out would be very problematic for the group," said Valérie Marcel, an oil expert at Chatham House in London. "If there are fuel shortages everywhere they are in charge, they aren’t providing services, and if their military logistics are affected by a lack of refined products, it would be very serious for them," she said.

The Islamic State’s ambitious military operations, including a large-scale assault on the Syrian town of Kobani and its ongoing use of Humvees, trucks, and tanks, make it more dependent on a steady supply of fuel, just like other armed forces throughout history. Gen. George S. Patton’s armored dash across France in World War II wasn’t stopped by the Wehrmacht, but rather by empty gas tanks.

"Energy supplies play a core role in ISIS’s military campaign; therefore, hitting their resources and oil convoys will undoubtedly cripple their movement and hinder their advances," said Luay al-Khatteeb, visiting fellow at Brookings Doha Center and the director of the Iraq Energy Institute. He estimates that the total requirements for refined products in areas under ISIS control — including fuel used for power generation and for civilian transportation — come to between 170,000 and 200,000 barrels per day, far outstripping the group’s own resources.

At the same time as the airstrikes, ISIS’s oil operations have come under siege from another direction: Turkey. After months of seemingly turning a blind eye to the endemic smuggling across Turkey’s long and porous borders, Turkish officials started cracking down on illicit fuel sales in recent months. Local reports suggest that in some areas, illicit cross-border fuel sales may have fallen by as much as 80 percent due to tougher Turkish measures.

Still, it’s not totally clear to what degree the U.S.-led military campaign has really managed to disrupt ISIS’s oil business. One militant told the Wall Street Journal that oil production and refining continues apace, despite the military campaign. "The airstrikes have been lamer than expected," he said.

ISIS could also theoretically rebuild some of the shattered refining capacity taken out of action by allied airstrikes. Marcel of Chatham House said that mobile refineries could be built in 10 days at a cost of about $230,000 each — provided the terror group could get its hands on the equipment.

Treasury officials concede that targeting small-scale smuggled oil is harder than tracking illicit terror financing. A former State Department official said that oil smuggling continues, despite the attacks on the mobile refineries; only by rolling back ISIS on the ground can the United States and its allies permanently kneecap its moneymaking operations.

"You’re going to have to physically take the territory back," said Celina Realuyo, the director of counterterrorism finance programs at the State Department during the George W. Bush administration and now a professor at Georgetown University.

Jamila Trindle contributed to this article.

Keith Johnson is Foreign Policy’s acting managing editor for news. He has been at FP since 2013, after spending 15 years covering terrorism, energy, airlines, politics, foreign affairs, and the economy for the Wall Street Journal. He has reported from Europe, the Middle East, Africa, and Asia and, contrary to rumors, has absolutely no plans to resume his bullfighting career. @KFJ_FP

Trending Now Sponsored Links by Taboola

By Taboola

More from Foreign Policy

By Taboola