In our classic piece “ISIS Oil Trade Full Frontal: "Raqqa's Rockefellers", Bilal Erdogan, KRG Crude, And The Israel Connection [8],” we discussed how Masoud Barzani and the Iraqi Kurds transport some 600,000 b/d of crude to the Turkish port of Ceyhan in defiance of SOMO amid an ongoing budget dispute between Baghdad and Erbil.
Turkey facilitates this trade and we suggested that ISIS (which Turkey is suspected of supporting in order that the group might continue to destabilize Assad) may be using the same networks to get its illicit oil to market.
There’s some evidence that links ISIS to Ceyhan. As documented in an academic study by George Kiourktsoglou and Dr Alec D Coutroubis, tanker rates at Ceyhan seem to spike around significant oil-related events involving Islamic State. Here's the chart:
[9]
Additionally, an ISIS fighter captured by the YPG in Syria claims to have lived with an Islamic State commander in Adana, home to Ceyhan.
We also highlighted a piece by Al-Araby al-Jadeed [10] that outlines what the site says is a trafficking route that runs through Zakho. Here are some key passages:
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.
"After the oil is extracted and loaded, the oil tankers leave Nineveh province and head north to the city of Zakho, 88km north of Mosul," the colonel said. Zakho is a Kurdish city in Iraqi Kurdistan, right on the border with Turkey.
"After IS oil lorries arrive in Zakho - normally 70 to 100 of them at a time - they are met by oil smuggling mafias, a mix of Syrian and Iraqi Kurds, in addition to some Turks and Iranians," the colonel continued.
We bring all of this up again because less than 48 hours ago, Russia said it spotted some 12,000 tankers and trucks on the Turkish-Iraqi border. Where, precisely, are the tankers you ask? Why Zakho of course. Here's Lieutenant-General Sergey Rudskoy: “The [aerial] imagery was made in the vicinity of Zakho (a city in Iraqi Kurdistan), there were 11,775 tankers and trucks on both sides of the Turkish-Iraqi border."
“It must be noted that oil from both Iraq and Syria come through this [Zakho] checkpoint,” Rudskoy added, in case it was in any way unclear what Russia was suggesting.
As for the Kurds, well they swear it's there oil and not Islamic State's that's tied up at the border. From Bloomberg:
Iraq Kurds say own oil pumped to Turkey, not Islamic State Crude
Turkey closed border with Iraq during past few days due to war with Kurdish militants, causing long lines of oil tankers, Kifah Mahmoud, adviser to president of self-governed Kurdish region in north Iraq, says by phone.
Of course Kurdish crude is just as "undocumented" as ISIS oil given that technically, it belongs to Baghdad and not Erbil but we'll leave that aside for now. The important point here is that what the Kurds want you to believe is that none of the nearly 12,000 tankers parked at Zakho contain any ISIS crude even as more than one Kurdish security official specifically told Al-Araby al-Jadeed [10] that Zakho is the key transit point.
Additionally, note the timing. ISIS is losing ground and is on the verge of relinquishing Ramadi to Iraqi forces. One certainly wonders if the group's funding needs are rising just as the Russians are cutting off their revenue stream forcing Baghdadi to get as much of the oil through as possible while he still can.
Finally, it's also worth noting that there's something nefarious about the whole thing. That is, the Peshmerga are paid out of money Erbil collects from selling Kurdish crude and the Peshmerga are fighting ISIS. It's thus perverse that the Kurds apparently allow ISIS to use their transit routes on the way to securing the funding the group needs to keep fighting.
In any event, we wonder how long it will be before Baghdad green lights Russian strikes over Iraq, and how Moscow will deal with the intermingling of Kurdish crude with ISIS oil.
