Contact us

July, 11, 2016 Oil and ISIS

In the wake of the Orlando tragedy, the threat of extremist violence weighs heavy on us all. And while there are no confirmed direct links between the killer and ISIS, it has been confirmed he pledged allegiance to the group before the attack.


In times like this, it is worth reflecting on our way of life and how our choices affect us. Specifically, today I am thinking about how our dependence on oil affects our collective security. Is our dependence on oil to blame for ISIS? Of course not. But there are real questions about how vulnerable we make ourselves to threats like ISIS by building a civilization that is so dependent on a single resource. So today I want to explore the question: What is the connection between oil and ISIS?


Just this morning, CIA Director John O. Brennan sat before the Senate Intelligence Committee and reported progress in the coalition’s efforts to squeeze ISIS (or ISIL) and their finances. He then added, however,Yet ISIL is adapting to the Coalition’s efforts, and it continues to generate at least tens of millions of dollars in revenue per month, primarily from taxation and from crude oil sales.


Two questions naturally follow. First, how much money is ISIS making from oil? And second, how much does black market oil money (you can learn more about how they transport and sell it, here) contribute to the overall ISIS financial picture? Admittedly, it is rather difficult to peg either of these moving targets with certainty, but reasonable estimates exist, so let’s give it a shot.


First, the latest estimates put ISIS oil revenue at ~$35 million per month, or $420 million a year. This is actually a 30% drop from last year, when ISIS had an annual oil revenue run rate of  ~$600 million. This drop is largely the reason Director Brennan reported ISIS getting financially squeezed. According to Director Brennan, the decrease in ISIS oil sales is largely due to an air campaign since late 2015 against ISIS controlled oil infrastructure.


Next, so where else does ISIS get it’s money? The most comprehensive piece I’ve seen on this is from the Washington Post, outlining 12 ways in which ISIS is creating or has created revenue. Of these, the only revenue source identified that has at any point been more lucrative than oil is the looting of Iraqi banks. However, it should be noted that while the looting of Iraqi banks may have netted ISIS between $500 million and $1.5 billion in 2014, it is a revenue stream that is now tapped out. Unless ISIS expands into new territories, there are no more banks to loot. Therefore, as an ongoing revenue stream, oil is the biggest and most important revenue stream for ISIS. In an October 2014 report, Thomson Reuters estimated ISIS derives 38% of its funding from oil and another 17% from natural gas, meaning 55%, more than half, of all ISIS revenues are derived from the production and sale of fossil fuels. 


There is a narrative in the media, of course, that ISIS has grown rich and powerful because it is diversified, and there is truth in this, as demonstrated in the Washington Post piece. However, there is far more truth to the fact Thomson Reuters estimated ISIS assets at $2 trillion – yes, with a T – not because of several million dollars worth of revenue diversification, but because ISIS controls land with access to 60% of Syrian and 10% of Iraqi oil production. Thus, the wealthiest terrorist organization in history is not truly a diversification story, but simply another in a long line of wealth creation stories built atop an ocean of oil.


So what does this mean? It means that beyond the innumerable complexities blocking a path to stability and peace in the Middle East, enemies like ISIS can make the struggle even more difficult, intractable and violent by using the dependencies of our own civilization against us. There is no doubt that when civilization depends so greatly on a single resource (particularly one concentrated in chaotic regions) it creates very real threats to our shared security.


Oil is not the reason for ISIS. Oil is not to blame for ISIS. But the way we depend on oil has given ISIS an incredible short cut to wealth, power and influence. The world’s collective inability to summon the will to move away from oil dependence when clean, renewable and safe alternatives exist will make it far more difficult to ultimately destroy the ISIS threat, and has already made it all the easier for ISIS to wound us so deeply.


Found this useful? Share with the world.