Posted on 09/13/2014 3:38:57 AM PDT by markomalley
The value of the ISIS oil trade has been widely estimated at between $1 and $3 million per day, though experts have warned that the figure could be a high estimate.
On Wednesday, as part of President Barack Obama's plan to "systematically degrade, dismantle and defeat" the Islamic State of Iraq and Syria (ISIS), the U.S. Treasury Department said that it would step up pressure on the extremist group's illicit oil sales.
In a blog post that day, David Cohen, the department's undersecretary for terrorism and financial intelligence, said that the "Treasury is committed to ensuring that [ISIS] is unable to access the international financial system."
The value of the ISIS oil trade has been widely estimated at $1 to $3 million per day, though experts have warned that the figure could be a high estimate. It comes from crude gathered in oil fields across ISIS-held territory in Raqqa and Deir Ezzor provinces; then it's trucked into Turkey and Iraqi Kurdistan, or sold to vendors in regime-held areas.
We asked Richard Mallinson, head of international affairs and energy policy at Energy Aspects, to weigh in on the ISIS oil economy, how far it can reach, and how sustainably it might last.
Syria Deeply: How accurate is the widely reported $1 million-per-day number?
Richard Mallinson: It's difficult to get reliable information about domestic markets within the Middle East even before they become black markets. But the headline numbers widely quoted in the press – on how much money ISIS might be generating through the oil black market – are too high. The most common figure quoted is $1 million a day, based on original analysis that was done by the Iraq Oil Report. That was very speculative – and at the time, they were very clear on that – but now it's entered the media's narrative. And there are a few reasons why that number is questionable.
I'm skeptical about both the scale of the trade and the amount of revenue that's coming into ISIS'…" One reason is that we don't know what type of volume is moving, because the original Oil Report analysis referenced a source saying there were up to 100 trucks full of oil loaded from ISIS territory and sold per day. There are questions about how reliable that source is. That figure was also given early on, just after ISIS had taken control of fields in Iraq and before there had been much international attention to this issue of oil smuggling.
Even if that was the case – even if the number of trucks was as high – it will have fallen quite a bit by now. I don't think ISIS has the capability to maintain production on these oil fields at anywhere near that capacity. And the neighboring countries these trucks were moving towards –Turkey and Iraqi Kurdistan – will have tightened up their border checkpoints. A smaller number of oil cargos are still being sold, but I'm skeptical about both the scale of the trade and the amount of revenue that's coming into ISIS's coffers.
Syria Deeply: Where exactly is the oil going? How much cheaper is this oil?
Mallinson: There have been persistent reports inside Syria that there are sales from rebel-controlled areas and fields to regime-controlled territory. But it's unclear whether those sales are actually to organized arms of the regime or to local civilian markets in areas under Syrian army control.
These oil cargos are crude and need to be processed to some degree to be usable as fuel. They'll be going to small private refineries, and there are a number in Iraqi Kurdistan and Turkey. As a result of their small capacity, they're less closely observed and it would be easier for them to quietly process discounted smuggled oil from ISIS, then sell it.
There are reports of even more basic refining processes, of work being done to convert the crude oil and products being used as fuel – even the militants themselves could be selling the crude, to buyers who then process it into fuel. The normal supplies of fuel have been disrupted by the war, particularly in northern Iraq, where a flood of both IDPs and Syrian refugees have added pressure to the fuel distribution system. There's now a need for fuel supplies that are difficult to source and bring in. So this provides a market opportunity for less scrupulous groups.
The normal supplies of fuel have been disrupted by the war, particularly in northern Iraq. Genel Energy, one of the main operations in Iraqi Kurdistan, was trucking a lot of the crude it was producing in Kurdistan to local markets in 2013, and was getting an average of $65 to $75 per barrel, which were legit crude sales. There was no legal uncertainty or political risk there for buyers. For current black market crude sales – in the same area, the same market with the same economic pressures – I would guess sales of $50 to $60 per barrel.
Assumptions and calculations done in July are unlikely to still hold true today. I imagine that the Kurdish Regional Government has made firm statements about closing the border to smuggling, not tolerating it. It will have reduced the amount of oil smuggling, but I don't know if that's put off buyers at the local level. I imagine most buyers, if a truck pulls up at their doorstep, can figure out from both the sellers and the price of the oil that it might have come from ISIS.
We destroyed the Nazi, Fascist Italian and Imperial Japanese oil infrastructures with crude propeller powered aircraft against long distances, terrible flak and enemy fighters but we can’t destroy ISIS’s oil system when we’re armed with supersonic and stealth jets, special forces, drones, missiles and lasers? That tells me that someone pretty high up (cough, cough) doesn’t want us to.
How about a new UN Food For Oil program? The first one worked out so well.
How much of the ISIS oil does the U.S. buy these days? We have a supposed “leader” who refuses to allow oil in our country to flow, we need to get oil from somewhere, perhaps ISIS will make a deal.
How much of the ISIS oil does the U.S. buy these days? We have a supposed “leader” who refuses to allow oil in our country to flow, we need to get oil from somewhere, perhaps ISIS will make a deal. (SARC)
How much of the ISIS oil does the U.S. buy these days? We have a supposed “leader” who refuses to allow oil in our country to flow, we need to get oil from somewhere, perhaps ISIS will make a deal. (SARC)
“That tells me that someone pretty high up (cough, cough) doesn’t want us to.”
Don’t be coy. We all know you mean Valerie Jarrett, the unelected handler of the Current Occupant of the Oval Orifice, and the money man behind all this unrest, George Soros.
These things must be done “delicately”.
The ISIS crisis. Doing what it was meant to do. Never take strong enough action to actually diminish its effect, but look as if the Current Regime were always “striving” to contain it.
Herself, Madame Benghazi, the Cold & Joyless, was dumped from the candidacy for President on the Democrat ticket in 2008 because she was not sufficiently “compliant”. George Soros had been putting a great deal of funding into both the candidates at first, but shifted when the Clintons would not play exactly the part for which they were being coached.
“How much of the ISIS oil does the U.S. buy these days? We have a supposed “leader” who refuses to allow oil in our country to flow, we need to get oil from somewhere, perhaps ISIS will make a deal.”
Oil, with some exceptions, is a fungible resource. Thereby, it makes no difference who’s doing the selling and buying, it has the same effect on world-wide supply and demand equation regardless. ISIS supply must be eliminated at its source in order to stop cash flow.
It would also include the same usual suspects that broke the embargo on Iraqi trade during the 90s and who sell technology to the Iranians, despite agreed-upon export controls.
Most of these people would gladly sell their own mothers to work in a Muslim brothel and would gladly see their own wives/husbands decapitated heads on Muslim pikes if they could make a quick Euro out of the deal.
I would suggest that given the uncertainty expressed in the article, the crude sales at present are not really a priority problem.
The thrust of the article is that the current number in the press template is inaccurate and that what was earlier is likely not today.
The Kurdish government may have degraded the truck pipeline volume to much less than stated earlier.
The primary fact seems to be uncertainty.
The mention of oil makes one wonder if ISIS struck a deal w/ neocon godfather--Richard Perle---who was staring his own oil company in Iraq----according to the WSJ.
================================================
REMINDER The US left Iraq with not a barrel of oil to our name.....and rivers of young blood spilled on its decrepit soil.
====================================================
The war profiteering was mind-boggling. Pres Bush estimated the Iraq strike would cost $50-60 billion.....then Bush publicly fired his aide, Larry Lindsey, because Lindsey dared to say the war might cost more like $100 billion. That was in 2007 dollars.
Today we know the has poured into Iraq and Afghanistan some $3 TRILLION, and we're still pouring money down these rat holes........thanks to Richard Perle and rest of the neocons.
REFERENCE POINTS---Circa 2008, the WJSJ reported Perle was talking with a Turkish firm, AK Group International, and also a representative from the government of Kazakhstan. They are targeting the co-called "K18 concession" which is near the city of Erbil and is estimated to hold 150 million or more barrels of oil.
Houston-based Endeavour International would conduct the exploration and drilling, according to the Journal.
During the run-up to the Iraq war, Perle was chairman of the Defense Policy Board, which advises the US Pentagon. He was also a scholar at the American Enterprise Institute, a conservative think-tank in Washington.
===================================================
MOMENTS TO REMEMBER--- On the eve of the US invasion of Iraq, the Senate Foreign Relations Committee heard testimony from Marine Corps Gen Anthony Zinni---and other US military experts ---that the so-called architects (they dared not say "neocon") of the Iraq invasion were totally ill-prepared for a post-combat occupation.
US military experts ridiculed the Bush administration claims that rebuilding could be achieved within two years, that the weapons of mass destruction would be destroyed-------and that a vibrant new political and economic system would emerge.
===========================================
REMINDER: The neocon agit-prop was that these antediluvian Mideast countries, w/ ancient rivalries, were "thirsting" for Western-style democracy.
==================================================
Over a decade later, Iraq---and the rest of the Mideast----has yet to create a viable political and economic system....a system that is totally incompatible w/ their archaic Islamicist thinking macerated in the vengeful dicta of the Koran.
The rise of ISIS is a frightening reminder of Marine Corps Gen Anthony Zinni's words.
We haven’t wrecked it yet?
ISIS’s oil business needs to be pressured with large bombs and cruise missiles.
lara setrakian who used to cover middle east for Bloomberg has been responsible, along with other MSM for TOTALLY IGNORING IRAQ. For years more people were being KILLED in reported news in IRAQ than Syria...the media wouldn’t ADD up the numbers...they were surroagtes for the OBAMA scum..and reported what OBAMA wanted...Syria/Libya/Egypt were manageable under their imperfect leaders but Obama wanted to see if he could transform them and setrakian was a dummy who followed him...
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.