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Who Is Buying ISIS Oil?

Russian President Vladimir Putin has now formally claimed that the downing of a Russian plane by Turkey in Syria was in retaliation for Russia bombing ISIS oil destined for Turkey. The incendiary claim comes during a tense back-and-forth between President Putin and Turkish President Recep Erdogan over the attack on a Russian plane that left one Russian pilot dead. Russia has already imposed economic sanctions on Turkey, while Turkey and NATO consider possible responses to a shooting war breaking out between Turkey and Russia.

But what about the ISIS oil claim? Or for that matter, how is ISIS selling oil at all, given they are widely considered to be a terrorist group?

According to a report from the Associated Press, ISIS is making as much as $50 million a month from selling crude oil. The oil is extracted from territory ISIS controls in Syria and Iraq and sold to traders and smugglers who get it to other countries in the region and beyond.

Despite all the tough talk, the US and other belligerents have not yet seriously bombed the oil infrastructure under ISIS control. In fact, the AP reports that ISIS’ operation is getting increasingly sophisticated with the group bringing in better equipment and energy consultants.

After the sale, the traders and ISIS have to figure out ways to smuggle the oil out of ISIS controlled territory. One of the major routes for oil smuggling runs through Turkey which also hosts many of the traders and smugglers.

The Turkish government is reportedly not only aware of this activity, but is complicit, with the corruption going as high up as President Erdogan, whose son, Bilal Erdogan, is directly involved in smuggling ISIS oil out of Syria. Bilal’s company, BMZ Group, is said to help ISIS oil get into the Western energy supply chain after taking a slice of the profits.

So while France and other European countries wage war against ISIS, they also buy the oil that puts money into ISIS’ war chest.

Besides Turkey, there is reportedly another major facilitator of smuggled oil in the area: Israel. According to Reuters, Israel has been buying “illegal” oil from the Kurds who are defying the Iraqi central government and bypassing Baghdad to sell oil to whomever they want. Israel has been assisting the smuggling effort and getting a taste of the profits, as well as the oil.

Not surprisingly, there is now a report from Al-Araby that the same routes and networks used for smuggling illegal Kurdish oil are being used to smuggle illegal ISIS oil. The oil traders and smugglers opportunistically label any oil they get as from the “Kurdistan Regional Government” and send it through the dark networks:

Al-Araby has obtained information about how IS smuggles oil from a colonel in the Iraqi Intelligence Services who we are keeping anonymous for his security. The information was verified by Kurdish security officials, employees at the Ibrahim Khalil border crossing between Turkey and Iraqi Kurdistan, and an official at one of three oil companies that deal in IS-smuggled oil.

The Iraqi colonel, who along with US investigators is working on a way to stop terrorist finance streams, told al-Araby about the stages that the smuggled oil goes through from the points of extraction in Iraqi oil fields to its destination – notably including the port of Ashdod, Israel.

ISIS, apparently embarrassed, told Al-Araby it does not intentionally sell to Israel and blamed “agents along the route to international markets” for ISIS oil being shipped to Israel.

What makes oil such a lucrative business for ISIS is how fungible it is. Hiding the source of crude oil can often be as easy as re-labeling a barrel, not that many buyers and sellers are particularly interested in origin anyway. ISIS is benefiting immensely from this dynamic and, given Turkey’s behavior, the group has found some strong allies who want to see the illegal oil continue to flow.

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Dan Wright

Dan Wright

Daniel Wright is a longtime blogger and currently writes for Shadowproof. He lives in New Jersey, by choice.