• Steve H. Hanke
    05/04/2016 - 08:00
    Authored by Steve H. Hanke of The Johns Hopkins University. Follow him on Twitter @Steve_Hanke. A few weeks ago, the Monetary Authority of Singapore (MAS) sprang a surprise. It announced that a...

The ISIS' Top Line: $2 Million In Daily Revenue From "Oil Sales, Extortion, Taxes And Smuggling"

Tyler Durden's picture


A few days ago when we commented, somewhat in jest, on the seemingly impressive strategic planning behind the Islamic State jihadists becoming a "commodities trading powerhouse" (when it was revealed that ISIS had sold the grain it had stolen from the Itaqi government back to the government), we described just how well-versed in the ways of the modern world ISIS was: "from quickly taking control of (i.e., robbing) a central bank, to capturing the latest and greatest in US military equipment, to staging an amazing blitz-campaign that has resulted in the creation of a caliphate and captured the bulk of northern Iraq and a third of Syria including all of the former country's oil fields, to even having glossy year end annual reports, one would almost be forgiven in assuming that some vastly more strategic minds are behind what on paper at least would be a far more disorganized force."

Now, thanks to Bloomberg we can quantify this particular strategy, and put top-line numbers with the ISIS faces, so to speak: "The Islamic State, which now controls an area of Iraq and Syria larger than the U.K., may be raising more than $2 million dollars a day in revenue from oil sales, extortion, taxes and smuggling, according to U.S. intelligence officials and anti-terrorism finance experts."

In other words, a well-greased government machine, and not only that but one which has an infinitely greater net worth than the US, because with a net worth of some $2 billion (and rising by $2 million daily), the Islamic State has a "worth" of some $17+ trillion more than the United States, which instead of equity is funded entirely through debt, and ever more debt, thanks to the ongoing devaluation of the world's reserve currency.

Some more on how ISIS became the world's first self-contained, and funded, jihadist entity:

Unlike other extremist groups’ reliance on foreign donations that can be squeezed by sanctions, diplomacy and law enforcement, the Islamic State’s predominantly local revenue stream poses a unique challenge to governments seeking to halt its advance and undermine its ability to launch terrorist attacks that in time might be aimed at the U.S. and Europe.


“The Islamic State is probably the wealthiest terrorist group we’ve ever known,” said Matthew Levitt, a former U.S. Treasury terrorism and financial intelligence official who now is director of the counterterrorism and intelligence program at the Washington Institute for Near East Policy. “They’re not as integrated with the international financial system, and therefore not as vulnerable” to sanctions, anti-money laundering laws and banking regulations.

This is bad news for banks such as HSBC, which will be unable to launder "donations" to the Islamic State, which does not need such services:

There are few reliable financial figures for the groups. A UN report estimated the Taliban raised about $400 million in 2011 through local taxes, donations, and extortion directed at drug smugglers, mobile phone operators and aid projects.  The Afghan Taliban smuggle opium, minerals and timber; Colombia’s Marxist FARC rebels export cocaine; and Abu Sayyaf in the Philippines, as well as the al-Qaeda offshoots in Yemen and North Africa, have raised millions by taking hostages for ransom.


The money that the Islamic State group receives from outside donors pales in comparison to its income from extortion, kidnapping, robbery, oil smuggling and the like, said a U.S. intelligence official who spoke on the condition of anonymity to discuss classified information.

In short, ISIS would have simply been the latest entrant of the Petrodollar closed loop, if only it had somewhat better diplomatic relations with the US. As for the currency of choice, so far ISIS does not appear to have a particular predisposition toward dealing in greenbacks, which means that in the coming months one should expect strategic "scouting" missions by both Russia and China, deep below the radar of course, in the shadowy alleyways of Reqqa.

The revenue streams available to the Islamic State through its control of a vast oil-rich territory and access to local taxes dwarfs the income of other groups.


With its control of seven oil fields and two refineries in northern Iraq, and six out of 10 oil fields in eastern Syria, the terror group is selling crude at between $25 and $60 a barrel, Luay al-Khatteeb, a visiting fellow at the Brookings Institution’s Doha Center in Qatar, said in a telephone interview. That reflects a discount from world market prices due to the risk faced by middlemen smuggling and brokering the oil. By comparison, Brent crude for October settlement fell 1 cent today to $102.28 a barrel on the London-based ICE Futures Europe exchange.

Nations such as Saudi Arabia and the UAE are hardly enjoying these dumping rates, but one person who will be truly displeased by a marginal seller who gives as much as a 75% discount will be none other than Vladimir Putin, for whom as is widely known, the stock market may go up and go down, but one thing matters critically: to keep the price of Brent as high as possible. And with ISIS impairing the supply and demand curves, one wonders how long before the Kremlin decides to make a move of some sort.

Based on al-Khatteeb’s interviews with contacts in Iraq, the extremist group controls Iraqi fields with a production capacity of 80,000 barrels a day and now is extracting about half that amount. The Islamic State, he said, is likely earning some $2 million a day from crude sales, paid in cash or bartered goods as the oil crosses into the Kurdistan region of Iraq, Syria, Turkey and Jordan.


One important financial battlefield for the Islamic State, said the U.S. intelligence official, is the Baiji refinery in northern Iraq, which produces roughly a third of the country’s total oil output. It’s been shut down since an attack by extremists in June, and remains the scene of heavy fighting between extremists and government forces.

So what about the use of funds from the oil sales: for now these appears to be going to “keep the war machine running, to maintain institutions.” in the territory the Islamic State has seized from the Iraqi and Syrian governments, and “the rest of the cash is going to recruiting,” al-Khatteeb said.

Robin Mills of Dubai-based Manaar Energy Consulting and Project Management, said in a telephone interview that authorities have begun cracking down on oil smuggling into the Kurdish region, meaning more of the crude will be used locally by the Islamic State and oil revenues will start to shrink.


A second source of revenue for the Islamic State is taxing residents of the densely-populated cities such as Mosul in the territory it controls, which is roughly the size of Wyoming, and controlling granaries and other critical resources. Criminal activity from bank and jewelry store robberies, extortion, smuggling and kidnapping for ransom is also an important source of revenue.

Another source of profit: the group may have raised $10 million or more in recent years from ransom payments alone, said one U.S. official.

While the U.S. military launches airstrikes in Iraq against militants and their weaponry -- much of it American hardware abandoned by Iraqi forces -- other agencies are seeking ways to deplete the Islamic State’s coffers.

But the punchline, and where one can be certain the western banks are involved, is the following:

“It’s not totally clear where they’re storing all this money, but there may be ways to actually go after it,” he said. Whether or not it’s in a bank account, “you’ve got to put it somewhere.”

Uhm, just braintsotmring here, but has anyone thought to check HSBC and JPM's "private client" services database? Like we said, just a thought: clearly the world's largest banks would never stoop so low as to fund and launder money for the world's most barbaric and feared terrorist organizations.

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Mon, 08/25/2014 - 18:09 | 5142294 Publicus
Publicus's picture

And yet the tax/extortion paid under ISIS is less than that paid to the previous "government"

Mon, 08/25/2014 - 18:19 | 5142341 Pinto Currency
Pinto Currency's picture




Creation of ISIS Is one of Obama's few successes.

Mon, 08/25/2014 - 18:24 | 5142351 CH1
CH1's picture

2 million a day?? Those are little league numbers!

The US guv takes in several billion a day from their extortions!

Mon, 08/25/2014 - 18:30 | 5142377 espirit
espirit's picture

Don't take it personal, it's just business.

Mon, 08/25/2014 - 18:32 | 5142388 CH1
CH1's picture

It is just that, business... Joe and Jane Citizen are no more than cows to be milked and slaughtered.

One wonders if they will EVER wake up.

Mon, 08/25/2014 - 18:39 | 5142420 espirit
espirit's picture

Prolly not until they get hungry.

Mon, 08/25/2014 - 20:24 | 5142785 max2205
max2205's picture

I hear they are going to do an IPO

Mon, 08/25/2014 - 21:10 | 5142965 The_Dude
The_Dude's picture

Collateralize that bitch.....who wants to buy the head tranche?

Mon, 08/25/2014 - 23:28 | 5143515 markmotive
Tue, 08/26/2014 - 01:09 | 5143737 0z
0z's picture

"the world's most barbaric and feared terrorist organizations."

I believe the USA still holds that title.

Tue, 08/26/2014 - 04:02 | 5143881 James_Cole
James_Cole's picture

This is bad news for banks such as HSBC, which will be unable to launder "donations" to the Islamic State, which does not need such services:

Every terrorist organization / drug cartel worth its salt undersstands the value of a TBTJ partner. #believeinHSBC

Tue, 08/26/2014 - 04:38 | 5143901 Confused
Confused's picture

 but one person who will be truly displeased by a marginal seller who gives as much as a 75% discount will be none other than Vladimir Putin, for whom as is widely known, the stock market may go up and go down, but one thing matters critically: to keep the price of Brent as high as possible.


As others have pointed out, ISIS has certainly (at least in the mind of the public) come out of nowhere. One has to ask, how is this possible? If intelligence circles, were really doing what they claimed, surely they would have seen this through the early stages. And if so, they would have tried to stop this earlier. But as we've seen, ISIS has steam rolled everyone. So my question is, is it possible that this is a subversive attack on Putin? 

Mon, 08/25/2014 - 23:23 | 5143500 TheReplacement
TheReplacement's picture

And that is what makes if feel so personal.  We are less than dirt to them, just items to be discarded or used, don't matter which.

Mon, 08/25/2014 - 18:30 | 5142381 SWRichmond
SWRichmond's picture

Yes, imagine some terrorists making money from taxes and extortion!

Government = organized crime.

Mon, 08/25/2014 - 19:17 | 5142546 unrulian
unrulian's picture

you forgot booze, drugs, prostitution and gambling...have I forgot any?

Mon, 08/25/2014 - 19:34 | 5142614 Kirk2NCC1701
Kirk2NCC1701's picture

Freeze and Seize their Accounts!  Duh.

What, the Fed + BIS + NSA can track ANY bank account and transaction on the planet, can seize or freeze accounts abroad, but can't do the same to ISIS?  Are you fucking kidding me!?

Mon, 08/25/2014 - 23:27 | 5143514 TheReplacement
TheReplacement's picture

Can but why?  They are gonna make a fortune letting this play out.

Mon, 08/25/2014 - 18:38 | 5142411 AlaricBalth
AlaricBalth's picture

Hillary Clinton deserves credit for that.

2012 - Clinton first proposed a plan to then-CIA Director David Petraeus to partner on a gun-trafficking program to arm the Syrian resistance and “vet the rebel groups, and train fighters who would be supplied with weapons,” according to The New York Times.

June of 2012: The New York Times reports that the CIA is operating a secret arms transfer program that sounds exactly like the plan Clinton developed with Petraeus. Suddenly, there is: “…an influx of weapons and ammunition to the rebels.”


Mon, 08/25/2014 - 18:45 | 5142423 QQQBall
QQQBall's picture

They only claim $2MM through good tax accounting. The free USSA roll-up munitions and equipment are carried at a zero cost basis with excellerated depreciation write-offs. ISIS gonna get the cap gains  hammer if they sell that stuff for a profit. Look for them to form an airport MLP soon.

Mon, 08/25/2014 - 19:03 | 5142487 cougar_w
cougar_w's picture

You should write them with your suggestions.

Mon, 08/25/2014 - 18:25 | 5142361 Freddie
Freddie's picture

Sounds like the CIA....oh it is!

Mon, 08/25/2014 - 20:10 | 5142744 Overfed
Overfed's picture

Oil sales, taxes, extortion, and smuggling. Sounds like a government to me.

Mon, 08/25/2014 - 18:35 | 5142401 Berspankme
Berspankme's picture

$2 mil a day and free weaponry from John Mcshitstain and that other bobsey twin

Mon, 08/25/2014 - 18:35 | 5142403 junction
junction's picture

The solution: have the Justice Department send in its ace investigators to find out why ISIS is not filing Suspicious Activity Reports on potential money laundering.  After all, why just target Americans who deposit legally obtained cash in their bank accounts.  No loss if these investigators looking for civil penalties find out what ISIS does with all those sharp wooden stakes it has.

Mon, 08/25/2014 - 18:09 | 5142298 unrulian
unrulian's picture

That's exponential growth; these asshats shoud take their movement public I bet that IPO would be a killer 

Mon, 08/25/2014 - 18:19 | 5142338 walküre
walküre's picture

ticker, well ... ISIS of course

Mon, 08/25/2014 - 19:03 | 5142489 cougar_w
cougar_w's picture

Heads above the rest, certainly.

Mon, 08/25/2014 - 18:10 | 5142300 GVB
GVB's picture

Nuremberg trials, ok

Mon, 08/25/2014 - 18:51 | 5142306 Duc888
Duc888's picture




Not buyin' it.


Someone larger is providing logistics, intel and cover for them.


Mon, 08/25/2014 - 23:30 | 5143519 TheReplacement
TheReplacement's picture

The training and intel are telling.

Mon, 08/25/2014 - 18:12 | 5142308 Platinum_Investor
Platinum_Investor's picture

I very much doubt it's that high.

Mon, 08/25/2014 - 18:14 | 5142319 Itchy and Scratchy
Itchy and Scratchy's picture

They should go public. Goods margins & cash flow. Hot market too! Sounds like a perfect Goldman deal to me!

Mon, 08/25/2014 - 18:14 | 5142322 1stepcloser
1stepcloser's picture

Run some drugs and you'd have the CIA's model

Mon, 08/25/2014 - 23:30 | 5143524 TheReplacement
TheReplacement's picture

You are thinking Afghanistan.  This is oil country.

Mon, 08/25/2014 - 18:14 | 5142323 BlindMonkey
BlindMonkey's picture

Once they are exchange listed they are respectable right? It worked for Goldman Sachs.

Mon, 08/25/2014 - 18:18 | 5142326 falak pema
falak pema's picture

Maybe ISIS will make it to the fortune 500 list.

When they do they will be as respectable as Qatar and as feared as Israel.

That's the only yardstick the West and Hollywood really understand.

"We print the legend not the reality, let alone the truth !"

Mon, 08/25/2014 - 18:16 | 5142327 just-my-opinion
just-my-opinion's picture

I Thought Taxes and Extortion were the same thing

Mon, 08/25/2014 - 18:19 | 5142342 JamesBond
JamesBond's picture

Orwell, is that you?




Mon, 08/25/2014 - 18:15 | 5142328 NoWayJose
NoWayJose's picture

ISIS is making $2 million each day while the US is spending $2 billion a day more than it takes in. Which one will 'fall' first?

Mon, 08/25/2014 - 18:27 | 5142366 Freddie
Freddie's picture

Sounds like they are doing better than Amazon, Twitter and a few other stocks.

Mon, 08/25/2014 - 18:16 | 5142329 Infinite QE
Infinite QE's picture

Add child trafficking and organ harvesting and this could be Israel.

Mon, 08/25/2014 - 18:17 | 5142333 Not Too Important
Not Too Important's picture

When do they get their BIS Central Bank branch? It sure was quick for the Libyan 'freedom fighters'. Gaddafi was still there.

Mon, 08/25/2014 - 18:20 | 5142349 Infinite QE
Infinite QE's picture

All of their cash deposits go through a Rothschild-owned local bank and for their trading clearing, it's GS. Keep it all in the family.

Mon, 08/25/2014 - 18:17 | 5142334 MKD
MKD's picture

ok so who is isis selling oil to.why dont we put sanctions on them instead of russia.

Mon, 08/25/2014 - 18:24 | 5142358 FeralSerf
FeralSerf's picture

Israel, Turkey and maybe France.

Because ISIS is a Mossad and CIA operation.

Mon, 08/25/2014 - 19:06 | 5142501 cougar_w
cougar_w's picture

Because -- oil.

Mon, 08/25/2014 - 18:19 | 5142343 surf0766
surf0766's picture

O thinks if he gives them their own state all will be right in the world.

Mon, 08/25/2014 - 18:20 | 5142345 docmac324
docmac324's picture

News is they are trying to get both the Ebola virus, and a dirty bomb in through Mexico.


Houston, we have a problem.

Mon, 08/25/2014 - 18:28 | 5142369 CH1
CH1's picture

And I hear they have a weaponsized AIDS virus that will be released into the atmosphere over every major city in America!

Fear sucks.

Mon, 08/25/2014 - 18:37 | 5142412 NOTaREALmerican
NOTaREALmerican's picture

Re: through Mexico

All them tur-bine sum-brero weanin' Mexicans sneekin'-r-cross-r-borded ain't just-a Mexicans lookin to pick fruit if you know-a-where I'm-a-headin' here !

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