S&P Global Platts

London — Iranian proxy militias are thought to be smuggling crude oil from western Iraq to Syria, picking up a lucrative business left behind by the Islamic State, according to witnesses and people with knowledgeof the illicit trade.

Iran militias revive Islamic State oil trade into Syria from Iraq: sources - oilandgas360

The groups, allegedly linked to the Iranian Revolutionary Guard Corps (IRGC), may have gained access to a handful of oil fields and refineries in Iraq and Syria, using the fuel and proceeds from sales tothe local population to fund their activities, the sources said.

“Every week there are tankers entering from Iraq loaded with oil — between 30-40,” said one source who lives along the main supply road in Syria and spoke on condition of anonymity for security reasons. “They come every week at night to empty their cargo, and in the day, are empty on the way back to Iraq.”

The amount of oil involved is as high as 10,000 b/d, though some sources involved in the transactions say it averages closer to 4,000 to 5,000 b/d.

A spokesman for Iran’s Foreign Ministry did not respond to a request for comment.

Assem Jihad, a spokesman for Iraq’s Oil Ministry, said: “The government and the ministry are working to prevent oil smuggling from all of Iraq’s cities.”

However, Ali Farhan Hamid, the governor of Iraq’s far western Anbar province, where much of the alleged oil transit is occurring, denied any Iranian militia involvement in the province’s affairs.

“There is no presence for the Iranians in Anbar,” he told Platts through a translator last week, when he was in London to drum up investment in the rebuilding province, particularly in its oil and gas fields. “We have two American [military bases] in Anbar, so there cannot be any penetration by the Iranians. It is totally under control.”

But the US government is aware of the smuggling operation, according to an official from US President Donald Trump’s administration, who spoke on the condition of anonymity.

The US Central Command — which oversees the American military presence in the Middle East — and spokesmen for the US Defense, State and Treasury departments all declined to comment.

Sources on the ground told Platts that the Iranian-backed militias are filling a void left by the Islamic State, which in 2014 and 2015 controlled some 50,000 to 80,000 b/d of oil production in western Iraq and eastern Syria.

At its height, the group was earning up to $40 million to $50 million a month from its oil operations.


Sources in Anbar now describe Iranian-backed militia tanker convoys taking the crude from Iraq to Syrian regime-controlled refineries in Deir ez-Zor, Syria, and also selling crude to Syria’s Baniyas refinery on the Mediterranean coast.

Refined products are supplied to the militias, as well as sold to local civilians. Several residents of Deir ez-Zor told Platts the fuel on offer ranges in price from $63/b for diesel and $104/b for gasoline in areas controlled by the US-backed Syrian Defense Forces and up to $125/b for diesel and $167/b for gasoline in areas controlled by the Syrian regime and Iranian proxies.

Platts assessed FOB Arab Gulf 10 ppm sulfur gasoil at $77.26/b and Arab Gulf 95 RON gasoline at $71.88/b on Monday’s Asian close.

According to sources in the region, the same militias also control at least three oil fields in Syria: the Al-Tayem field, which can produce between 2,000 to 4,000 b/d; the Ward field, which also produces 2,000 to 4,000 b/d; and the Al-Husaynan field, which pumps 2,000 b/d.

Analysts who closely watch the IRGC say that Iranian proxies maintain an extensive weapons smuggling system that could be used to facilitate oil trade to help fund their operations.

The militias are expected to be self-financing operations for the IRGC, but many of them, particularly in Syria, struggle with revenue generation, said Michael Knights, a senior fellow at the Washington Institute for Near East Policy, specializing in military and security affairs.

“Iran wants to tie Iran, Iraq, Syria and Lebanon into one sanctions-evasion and economic/energy cooperation bloc,” he said.


The convoys do not always operate with impunity, the sources in Anbar said, citing recent air strikes launched against some of the convoys by international coalition forces.

One attack on December 16 allegedly incinerated two tanker trucks in the Suwaya area of Deir ez-Zor when they entered from Iraq. Local journalists posted satellite photos purporting to show the air strike on Facebook.

Analysts said US forces would be unlikely to target IRGC-controlled oil convoys, or facilities without a request from Iraqi authorities, given that the US military mission there is primarily focused on countering the IS and training Iraqi counterparts.

“If such oil networks are ever hit in kinetic strikes, it would be by Israel or the US in retaliation for some future Iranian or militia action,” Knights said.

Afshon Ostovar, an assistant professor of national security affairs at the US Naval Postgraduate School who has written a book about the IRGC, said the US would view the illicit oil trade as “essentiallyan internal Iraq issue.”

The US maintains a military base with the Iraqi Armed Forces in Anbar’s Ayn al-Asad Airbase, about 100 miles (160 km) west of Baghdad, and Iraqi officials in late 2018 revealed two other US bases near the Syrian border in northern Rumana and Al-Rutbah.

The US is attempting to secure Syria’s oil sector, cement closer ties with Iraq and squeeze Iran. The Trump administration in April imposed sanctions on the IRGC and designated it a terrorist group, one of a series of sweeping measures the US has implemented to cut off funding to Iran’s government.

“Iraqis have paid a steep and bloody price for the malign influence of the Iranian regime,” David Schenker, the US’ assistant secretary of state for near eastern affairs, told reporters last week.

— Herman Wang, [email protected]

— Brian Scheid, [email protected]

— Edited by Andy Critchlow, [email protected]

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