Iraqi offensive cuts ISIS oil revenue

Islamic State militants no longer control any oil wells in Iraq following an offensive by government forces last week. Iraqi forces retook the oilfields of Shargat and Qayyarah, leaving ISIS unable to produce oil in Iraq and unable to smuggle oil out of the country to sell and fund their organization, reports Kurdish news agency Rudaw.

Iraqi forces have yet to recapture the Najma oilfield, near Qayyara, but its producing wells are no longer accessible to ISIS because of the ongoing government offensive and air strikes, Reuters reports. ISIS set fire to the oil as it retreated from the area.

“Najma has yet to be liberated because some sites are in the conflict zone. The reality is that it is extremely difficult to extract and smuggle oil while our forces are advancing towards Mosul…,” oil ministry spokesman Asim Jihad said.

The loss of Iraq’s oil resources will hurt the ISIS wallet as the radical militant army looks for ways to continue funding its activities. The group still has oil assets in Syria, however, which constitute roughly 70% of its total income, according to Dr. Bewar Khinsi, an economic adviser to the Kurdistan Region’s intelligence agency.

ISIS Syrian production is 80,000 BOPD, revenue is $750,000 per day

In Syria, ISIS holds three significant oilfields. Of the 80,000 barrels ISIS produces on a daily basis, it sells 50,000 through smuggling and “each barrel sells for $15 to $20,” Khinsi said.

According to Khinsi’s figures, the extremist group makes an estimated $750,000 daily and $22.8 million per month.

But oil is not the terrorist group’s only source of income, the Kurdish economist explained.  “Euphrates and Al Baath dams produce electricity and the Syrian regime buys it.”

The loss of a significant portion of its oil income will likely force ISIS to increase taxes and fines in the areas still under its control.

Iraq pumping more oil than ever before

That was the title of a CNN Money story in June. Iraq, which relies on oil to fund nearly its entire government, increased daily oil production to an all-time high of 4.5 million barrels in May, according to estimates from research firm JBC Energy, CNN reported. “It’s also about 2 million barrels a day more than what Iraq was pumping before the 2003 U.S. invasion. Iraqi oil imports to the U.S. have tripled since January and now stand at the highest level since July 2014, according to ClipperData.”

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