Turkish air strikes in Syria last week signalled a new phase in a conflict that has left its bloody mark on every country in the region. But will the Turks now agree to US demands to cease all clandestine dealings with Islamic State?

When US special forces raided the compound of an Islamic State leader in eastern Syria in May, they made sure not to tell the neighbours.

The target of that raid, the first of its kind since US jets returned to the skies over Iraq last August, was an Isis official responsible for oil smuggling, named Abu Sayyaf. He was almost unheard of outside the upper echelons of the terror group, but he was well known to Turkey. From mid-2013, the Tunisian fighter had been responsible for smuggling oil from Syria’s eastern fields, which the group had by then commandeered. Black market oil quickly became the main driver of Isis revenues – and Turkish buyers were its main clients.

As a result, the oil trade between the jihadis and the Turks was held up as evidence of an alliance between the two. It led to protests from Washington and Europe – both already wary of Turkey’s 900-mile border with Syria being used as a gateway by would-be jihadis from around the world.

The estimated $1m-$4m per day in oil revenues that was thought to have flowed into Isis coffers over at least six months from late 2013 helped to transform an ambitious force with limited means into a juggernaut that has been steadily drawing western forces back to the region and increasingly testing state borders.

Across the region, violence has been spreading across borders, scattering huge numbers of refugees and contributing to the turmoil in neighbouring regimes. Few countries – from Turkey to Jordan, Lebanon, Iraq and Israel – remain unscathed by the tide of chaos spreading out from Syria.

Despite one year of air strikes aimed at crippling the group’s spread, Isis remains entrenched in northern and eastern Syria, in control of much of western Iraq and camped on Lebanon’s eastern border. Its offshoots are gathering steam in north Africa and now, more than at any time since the latest incarnation of Isis emerged, its leaders claim to be positioning the group for strikes well outside the territory that it now controls.

In the wake of the raid that killed Abu Sayyaf, suspicions of an undeclared alliance have hardened. One senior western official familiar with the intelligence gathered at the slain leader’s compound said that direct dealings between Turkish officials and ranking Isis members was now “undeniable”.

“There are hundreds of flash drives and documents that were seized there,” the official told the Observer. “They are being analysed at the moment, but the links are already so clear that they could end up having profound policy implications for the relationship between us and Ankara.”

On Thursday, nearly one year into the US-led air campaign against Isis, Turkey dropped its opposition to entering the fray, dispatching fighter jets to its border from where they fired rockets at Isis targets just inside Syria. The attacks were a response to a suicide bombing in the southern province of Suruc, which killed 32 people, and an earlier cross-border attack that killed a Turkish soldier.

The attacks were the first to be blamed on Isis and led to a strong backlash among some sections of Turkish society, where unease at Recep Tayyip Erdogan’s stance towards the insurgency was already running high. Turkey also said it would allow its Incirlik air base to be used as a staging point for attacks against Isis – backing down from its earlier insistence that some form of safe haven first be established inside Syria, in which refugees and mainstream opposition fighters could safely move.

Throughout much of the chaos that has enveloped Syria, which started as an insurrection against the regime of Bashar al-Assad and has been partly subsumed by the Isis brand of global jihad, Erdogan has insisted that the Syrian leader’s crackdown has been a rallying call for the jihadis and must be dealt with before Isis can be countered.

However, Turkey has openly supported other jihadi groups, such as Ahrar al-Sham, which espouses much of al-Qaida’s ideology, and Jabhat al-Nusra, which is proscribed as a terror organisation by much of the US and Europe. “The distinctions they draw [with other opposition groups] are thin indeed,” said the western official. “There is no doubt at all that they militarily cooperate with both.”

European officials have regularly said they have gained no traction trying to raise either organisation with Ankara and have long been warned off trying. Isis, though, has gradually been recognised as a force that can no longer be contained or managed. “We can talk about them now,” said a European official in Ankara. “As long as we describe them as ‘those who abuse religion’.

“This isn’t an overhaul of their thinking. It’s more a reaction to what they’ve been confronted with by the Americans and others. There is at least a recognition now that Isis isn’t leverage against Assad. They have to be dealt with.”

As Turkey wrestles with a new posture, Isis is entrenched along a swath of its southern border extending from its main border crossing with Syria at Killis to Hasakah in eastern Syria. Isis has reinforced its arc in the area in an attempt to safeguard the gateway to its self-declared caliphate, which remains its only viable supply line of people and merchandise.

The oil-smuggling operation run by Abu Sayyaf has been cut drastically, although tankers carrying crude drawn from makeshift refineries still make it to the border. One Isis member says the organisation remains a long way from establishing a self-sustaining economy across the area of Syria and Iraq it controls. “They need the Turks. I know of a lot of cooperation and it scares me,” he said. “I don’t see how Turkey can attack the organisation too hard. There are shared interests.”

The Isis member said the US-led air campaign had done almost nothing to change the extent of the group’s reach, which still includes most of eastern Syria and western Iraq, where Iraq’s security forces, led by Shia militia groups, have been unable to claw back losses since the fall of Ramadi in May.

On the Syrian-Lebanese border, however, the farthest west that Isis operates, a protracted battle with Hezbollah and Syrian troops is gradually tipping in favour of the Shia militant group. Hezbollah has led the push against Isis and Jabhat al-Nusra, who have been entrenched in the town of Zabadani, west of Damascus – a fight well inside Syria, which it says is necessary to protect Lebanon’s porous border.

“We are at a phase in this war where things that have been in the shadows for a long time are now being exposed to daylight,” said the western official. “Hezbollah is dominant in the west of Syria, and the Turkish role, however you wish to define it, is also becoming clearer. This is an important time for them. Will they now see Isis as a threat to their own sovereignty? Assad played with Isis and lost. The Turks will, too. A lot of damage has been done from this.”