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Guest Post by Matthew M. Reed | @matthewmreed Matthew Reed is Vice President of Foreign Reports, Inc. and a non-resident fellow at New America and the Payne Institute at the Colorado School of Mines.

In spite of a year-long U.S.-led bombing campaign, ISIS is still producing tens of thousands of barrels a day and generating revenue at an alarming rate. The group has had to change how it conducts business over the last year but it’s far from being put out of business. In fact, there’s even some indication that ISIS increased output in 2015.

Contrary to expectations, there’s some indication that ISIS actually increased oil output in 2015.

ISIS (also known as ISIL) doesn’t publish data or hold conference calls with shareholders, so tracking its oil operations isn’t easy. There are no definitive numbers or accounts. Instead we have reports that range in quality, first-hand snapshots of the scene on the ground, and official estimates that are hotly debated within the governments that produced them.

This two-part article focuses on ISIS oil operations and how they’ve changed over the last year. It relies on primary sources and common sense and is informed to some extent by my conversations with officials. The end result? Some plausible answers and plenty more interesting questions. Let’s start with the big questions and drill down.

How much oil does ISIS produce?

Last summer, when it was virtually unchallenged, sustained ISIS oil production was probably around 70,000 barrels per day (b/d), although the actual capacity of fields captured by ISIS was closer to 300,000 b/d. Fairly recent U.S. government estimates put production in the 20,000-40,000 b/d range, while a Financial Times investigation settled on 42,000-48,000 b/d this month.

ISIS production is split between Syria, where they control key fields in the east, and Iraq where they captured a handful in the north last year. Deir az-Zor is the beating heart of Syria’s oil industry and ISIS maintains an iron grip on it. But in Iraq the group has been forced to retreat from some oil-rich territory.

This is where things get interesting: On September 29, the U.S. Treasury sanctioned ISIS “supervisor” Sami al-Jaburi for his involvement in “oil and gas, antiquities, and mineral resources operations.” Beginning in April, Treasury says Jaburi worked with ex-ISIS oil emir Fathi al-Tunisi, who was killed by U.S. commandos in May, “to establish a new funding stream for ISIL from increased production at oil fields held by the organization.”

All along we’ve assumed ISIS would have trouble keeping production up, given its manpower and technical constraints. That may not be the case.

Did ISIS raise production this summer? By how much? Future designations might reveal more. It’s important to note that the Treasury designation is surprising but not altogether inconsistent: Official Treasury estimates for daily ISIS oil revenue also jumped this summer with little notice, possibly reflecting the success of Jaburi and Tunisi’s scheme.

All along we’ve assumed ISIS would have trouble keeping production up, given its manpower and technical constraints. That may not be the case. ISIS could yet succeed by cannibalizing facilities for parts, attracting outside talent, and/or importing equipment.

How lucrative is ISIS oil?

The bulk of local reports going back a year put the price at $15-25/barrel, typically on the low side. There’s been some speculation that falling world oil prices have cut into ISIS revenues. However, there’s no proof ISIS pins its price to anything other than what locals will pay for it. The group sells cheap oil to an isolated and captive market. Why should benchmarks matter in the so-called Caliphate?

The early estimate for ISIS oil revenues was $2-3 million a day. Media coverage ran with that number and so did U.S. officials for a time. However, the price/volume assumptions built into it were never clear. “It’s not an estimate that the U.S. intelligence community or the Pentagon is endorsing or has come up with,” a Pentagon spokesman said in September 2014.

The first official U.S. government estimate for ISIS oil revenue came in October last year. Then-Treasury Undersecretary David Cohen estimated that ISIS probably earned $1 million a day in June—before the anti-ISIS coalition intervened. That estimate held up until February 2015 when Cohen said ISIS revenues had fallen to just $2 million a week (or ~$300,000 a day). At that point, U.S. officials became convinced oil was not the top money maker for ISIS; instead the group relied more on taxation, tolls, ransom and theft. Official estimates came with big caveats but the U.S. government apparently believed it had cut down ISIS oil revenues by two-thirds.

That estimate lasted until July, when Treasury’s Assistant Secretary for Terrorist Financing Daniel Glaser concluded that oil ranked third among ISIS revenue streams, but it was still significant. “Earlier this year ISIL made about $40 million in one month, off of the sale of oil. So if you want to extrapolate that out, you get to about $500 million in the course of a year,” he said. $500 million a year works out to almost $1.4 million a day, which is almost a five-fold increase from the lowball claim made in February. (FT estimates revenue at $1.5 million a day as well.)

But are these estimates way off the mark? According to an internal ISIS memo published by a well-regarded academic source, Jihadology, the group earned much less in Deir Az-Zor—the most prolific ISIS oil patch—from December 23, 2014 through January 22, 2015. Revenues added up to just $66,000 a day from oil sales and about $11,000 a day from gas sales during that period. Hydrocarbons accounted for roughly 27 percent of ISIS revenues, while confiscations and taxes made up the rest. The memo doesn’t list refined fuel sales. That makes sense because the coalition knocked ISIS out of the refining business in the first few weeks of the air campaign. Yet it’s entirely possible that ISIS oil income was reeling late last year but has rebounded since. The memo may be accurate but outdated.

What’s a barrel of oil worth to ISIS? A lot more than the price at the wellhead.

Keep in mind, ISIS makes money from the oil trade after money changes hands at the fields. Trucks loaded with ISIS oil later pay ISIS tolls, often at multiple checkpoints, and local refiners pay ISIS taxes and license fees to do business. Beyond that, it’s an open secret that ISIS trades crude for imported refined fuel and natural gas for utilities supplied by the regime. What’s a barrel of oil worth to ISIS? A lot more than the price at the wellhead.

Part 2: Who buys ISIS oil? How exactly has the US-led coalition attacked the network?