BAGHDAD (Reuters) - Iraqi Prime Minister Haider al-Abadi said on Monday that most of the oil produced in Islamic State-held territory in Iraq and Syria was being smuggled through Turkey.

Iraqi security forces stand guard in a Baiji oil refinery, north of Baghdad, October 16, 2015. REUTERS/Thaier Al-Sudani

Turkey has repeatedly strongly denied any state involvement in smuggling oil from Islamic State-controlled parts of Syria or Iraq and says it has made progress in combating fuel smuggling networks that have operated on its borders for decades.

In a meeting with German Foreign Minister Frank-Walter Steinmeier on Monday, Abadi “stressed the importance of stopping oil smuggling by the terrorist gangs of Daesh, most of which is smuggled through Turkey”, according to a statement posted on his website.

Daesh is another name for Islamic State.

The Iraqi accusation comes at a time of heightened tension between Baghdad and Ankara, which deployed a heavily armed contingent of forces to a camp near the front line in northern Iraq last week.

Iraq says the deployment is a violation of its sovereignty and has threatened to refer the case to the United Nations Security Council unless Turkey withdraws its forces.

Abadi’s remark also echoes recent accusations made by Russia that Turkish President Tayyip Erdogan and his family were personally benefiting from smuggling oil from Islamic State-held territory. Erdogan denies the charges and has said he would stand down if such allegations were proven true.

The accusations about Turkey’s role in smuggling oil came to the fore after Turkish jets downed a Russian bomber on the Syrian border, in the most serious incident between Russia and a NATO state in half a century.

A senior U.S. State Department official played down the Russian allegations and said the amount of oil being smuggled into Turkey from Syria was not enough for anyone to profit from it significantly.

U.S. officials say coalition air strikes have destroyed hundreds of IS oil trucks, depriving the insurgents of a key source of income.

British, French and U.S. jets recently targeted Islamic State-controlled oil fields in eastern Syria as part of a campaign to cut the financial lifeline of the militant group.