Pools of oil surround a damaged oil pipeline in Iraq.
Photo by Scott Peterson via Getty Images

One analyst explains why.

By Michal Addady
November 19, 2015

The Obama administration has vastly underestimated how much revenue the Islamic State is pulling in from oil production and other assets.

Up until recently, the U.S. believed that the majority of ISIS’s revenue came from refined oil production, which it thought brought in $100 million per year. However, Bloomberg reports that, based on new intelligence received by Treasury officials this past May, the terror group is generating $500 million a year from oil and much more overall.

The U.S. has mainly been targeting refineries and storage depots, though an international policy analyst, Benjamin Bahney, told Bloomberg that the majority of the group’s oil revenue has increasingly been coming from crude oil rather than refined oil.

What’s more, Bahney, an analyst for Rand Corp., a think tank funded by the U.S. Department of Defense, says that ISIS has diversified its finances beyond oil. The new evidence suggest that it will be very hard for the U.S. to cut off the cash flowing to the terror group.

According to the Treasury Department, the Islamic State seized between $500 million and $1 billion from Iraqi banks last year. Additionally, the group has earned hundreds of millions from extortion, $20-$45 million from ransoming kidnapped victims, and about $5 million from foreign donations. UN agricultural officials and a Syrian economist have also estimated that ISIS could earn about $200 million from selling crops on the black market.

The Islamic State’s biggest budget drain is likely the salaries paid to its fighters, but Bahney estimates that those could be paid twice over using oil revenue alone. He says that the group’s best financial strength is its conservative spending, adding that he believes ISIS has built up a surplus of cash in the past year. “They’re going to be able to keep this going for a while,” Bahney said.

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