Black Flags and Black Gold

The Islamic State’s black flag flutters on rooftops across Iraq and Syria. Underwriting this black flag is a steady, lucrative and continuous stream of oil – the Islamic State’s black gold and lifeline. Islamic State is estimated to earn about $10 million a week from oil revenue which equates to over $500 million a year. This empowers the Islamic State to expand, recruit and continue to give off the semblance of statehood. The coalition bombing campaign, notwithstanding US claims that 43% of oil revenue has been affected, has failed to put a serious dent into oil revenue. The resiliency of Islamic State oil production is a major causal factor in the group’s continued capacity to project power and control territory.

This stream of black gold is turned into millions of dollars of revenue for the Islamic state thanks to a complex and well-established smuggling network. In Iraq, oil is smuggled to Iraqi Kurdistan where it is then resold on to Iran and other neighbors. In Syria, oil is smuggled across the Turkish border where it continues on its way. The Islamic State usually sells oil to smugglers at 50% the international going rate – a temptingly high-profit margin for all involved.

The Islamic State’s continued development of oil production and refining capacities and the strategic targeting of oil assets across Iraq and Syria betrays the essential state-building calculus of the group. A state cannot exist without regular revenue and resources to back it up. As long as the Islamic State can depend on oil revenue to fuel its war machine – estimated to comprise up to 100,000 fighters – it can continue to claim statehood and fight to back it up.

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