How Guns And Oil Net ISIS $1 Million A Day

Fortune   Vivienne Walt  

Why extremist group ISIS is the world’s most frightening “startup.”

Every startup needs financing and a market to succeed. So, too, for the Islamist extremist group ISIS—or simply the Islamic State, as it calls itself—whose fighters stormed across the Syrian border into Iraq in June and seized the country’s second-biggest city, Mosul, before moving on to the outskirts of Baghdad. Now ISIS, an outgrowth of the U.S. military’s deadly Sunni foes in Iraq a decade ago, is the tycoon of the jihadi world. Having taken over oilfields in war-torn northeastern Syria last year and reportedly earned tens of millions selling antiquities, it landed a giant infusion of cash by seizing about $425 million from a Mosul bank.

But ISIS’s real upside lies in exploiting one precious commodity: oil. The group nabbed three more fields in Iraq, tapping into pipelines and looting oil storage facilities in its new territory. Then it filled trucks and sold crude for the cut-rate price of $26 a barrel to Iraqi traders, who resold it to Kurdish smugglers at a 100% markup. ISIS quickly developed its smugglers’ network—to which it now sells about 100 truckfuls of oil daily for around $9,000 each—netting nearly $1 million a day, according to truckers and officials who detailed the bonanza to the industry newsletter Iraq Oil Report. Not bad for a group with just about 10,000 fighters. Said one Kurdish intelligence officer: “This is a very profitable business.”

Iraq Oil Exports Hit 25-Year High In February

AFP

Iraq exported 2.8 million barrels of oil per day in February, a top minister said Saturday, a sharp month-on-month gain and the highest such figure in at least a quarter-century.

Production, meanwhile, reached 3.5 million bpd, the deputy prime minister for energy affairs, Hussein al-Shahristani, told reporters in the southern port city of Basra as he inaugurated a refinery.

"Production in February was 3.5 million barrels per day, and we exported 2.8 million barrels per day," he said.

The export figure was the highest since then dictator Saddam Hussein invaded Kuwait in 1990, triggering a crippling embargo and international sanctions that massively restricted Iraq's energy industry.

In 2012, when average daily exports reached 2.5 million barrels per day, the oil ministry said it was the highest such figure since 1989.

Shahristani said February output would have been significantly higher if not for energy disputes with the country's three-province autonomous Kurdish region.

Most of Iraq's crude is exported via its southern terminals near Basra, but a significant portion goes through a northern pipeline that is periodically bombed by militants.