While the Islamic State finances itself in a number of different ways, it has long generated revenue from oil it produces in fields it has captured in both Iraq and Syria.
The issue has become more topical as Russian defense minister Anatoly Antonov showed satellite images he claims showed tanker trucks freely crossing the Syrian border into Turkey: "Mr Antonov also said Russia had seen evidence that Recep Tayyip Erdogan and his family are linked to ISIS oil." More details of the alleged relationship of the Erdogan family to ISIS oil exports can be found here. Bilal Erdogan, a son of president Erdogan, is said to be involved in trading ISIS oil through his shipping business. The appended video also discusses the issue. Zero Hedge wrote an interesting article after the Paris attacks but before the Turkish downing of the Russian jet:The West could easily simply bomb the oil wells but the wells would be a great benefit to any future government. Attacking the oil wells often run by locals and providing jobs could generate more support for ISIS. Some refineries have been put out of commission but there are still many small units operating. According to an AP account from Iraqi officials:The Guardian provides a map of ISIS oil in Iraq and where it goes. Much of it goes to Turkey through Syria but some goes to Iraqi Kurdistan or through that area to Syria and on to Turkey. Apparently the oil is bought right at the fields. Many of the smugglers want to sell the crude as close to where they are as they can so they can return quickly for more oil, Some however ship longer distances. A smuggler who was a former intelligence officer under Saddam Hussein said that he bought an oil tanker carrying 26 to 28 tonnes of oil for $4,200 and sold it in Jordan for $15,000. He lives in the Jordanian capital Amman. It cost about $650 dollars to bribe corrupt border officials.The Financial Times has a map that covers ISIS controlled fields in Syria as well as Iraq and also describes the process by which the oil is sold, refined, and marketed in different areas. The map shows smuggling routes into Turkey. One is in an ISIS-controlled area but there are a number of others in areas controlled by rebels. The article claims most of the oil is actually used to satisfy the demand in ISIS-controlled areas but is also smuggled into rebel areas. Some may also be bought in government controlled areas. Little is said in the article about exporting the oil except to say that this has declined because the price of oil is so cheap on the international market.The U.S. State Department rejected the Russian suggestion that Turkey was cooperating with ISIS to smuggle oil. Yet Toner, the department spokesperson, admitted there was smuggling of oil into Turkey:The allies could have stopped the flow earlier by bombing the tankers. The U.S. only started to bomb the tankers in mid-November after Russia announced Russian planes would begin bombing them, as they called them a "living pipeline." The U.S. noted that the drivers of the trucks were not ISIS fighters but Syrians trying to make a living. The Russians appear not to be concerned about that. Now the Americans are bombing the tankers too.
"The Most Important Question About ISIS That Nobody Is Asking" in which we asked who is the one "breaching every known law of funding terrorism when buying ISIS crude, almost certainly with the tacit approval by various "western alliance" governments, and why is it that these governments have allowed said middleman to continue funding ISIS for as long as it has?"
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 Iraqi officials spoke on condition of anonymity because they were not authorized to brief the press.
State Department spokesman Mark Toner told a news briefing that U.S. information was that ISIS was selling oil at the wellheads to middlemen who in turn were involved in smuggling the oil across the frontier into Turkey.But how is it that Turkey manages to allow a stream of oil tankers to cross the border as appears to be the case in the satellite photos? The oil still came from ISIS and they profited from the original sale,