ISIL oil production worth an estimated $800 million per year, IHS says

10/20/2014

ISIL oil production worth an estimated $800 million per year, IHS says

WASHINGTON, D.C. – Current oil production by the Islamic State in the Levant (ISIL) is estimated to be worth $800 million per year, equivalent to more than $2 million per day, according to new estimates by IHS.

The terrorist group -- also known as the Islamic State of Iraq and Syria (ISIS), the Islamic State and Daesh -- is able to generate significant revenues despite producing only a fraction of the pre-war oil capacity of the territory it controls and selling what oil it does produce at a steep discount on the black market.

“Oil fuels ISIL’s war machine, notably including the military vehicles vital to its movements and fighting capabilities,” a recent IHS Energy analysis says. “Oil directly finances ISIL’s myriad activities and encourages the activities of middlemen who sell, transport and export the oil and thus have a vested interest in ISIL.”

ISIL currently controls as much as 350,000 bopd in pre-war capacity in Iraq and Syria but IHS estimates that it is only able to produce between 50,000-60,000 bopd with the amount varying on a day-to-day basis. This fraction of pre-war capacity is the result of warfare, shut-ins and ISIL’s limited technical prowess operating the fields, IHS says.

The oil that ISIL sales on the black market -- mostly via trucks through smuggling routes on the Turkish border -- is sold at a steep discount at prices ranging from $25-$60/bbl, with an average of $40 being a reasonable assumption, IHS estimates. This is compared to around $85/bbl recently for Dated Brent, the international benchmark.

Future oil revenues growth for ISIL remains to be determined and will be heavily influenced by territories gained/lost in coming months, IHS says. In light of ongoing U.S.-led airstrikes against ISIL, it is also unclear if the terrorist group has enough refining capacity -- which currently consists mostly of simple mobile refineries that can be loaded and transported by truck -- to meet its own needs.

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