Oil output down, tax up: Here's what's going on with Islamic State's finances

Lynsey Barber
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Palmyra was recently liberated from Islamic State (Source: Getty)

Islamic State is having financial troubles.

The terrorist group is bringing in millions of dollars less than it did this time last year.

“The Islamic State is still a force in the region, but, this drop in revenue is a significant figure and will increase the challenge for the group to run its territory in the long term,” said Ludovico Carlino, senior analyst at IHS.

All in, monthly revenue was $56m in March, according to the IHS Global Monitor, 30 per cent down on last summer's $80m.

Taxes rising

A loss in territory over the last year has resulted in a 23 per cent drop in cash it collects from taxes, which makes up around 50 per cent of its revenues along with confiscation.

“The Islamic State has lost about 22 per cent of its territory in the past 15 months. Its population has declined from around nine million to around six million. There are fewer people and business activities to tax; the same applies to properties and land to confiscate,” said Columb Strack, senior analyst at IHS.

This has led to an increase in taxes imposed on those within areas controlled by Islamic State. "These taxes include tolls for truck drivers, fees for anyone installing new or repairing broken satellite dishes, and ‘exit fees’ for anyone trying to leave a city,” said Carlino. It is also imposing fines on things such as driving on the wrong side of the road, and on people who are unable to answer questions about the Quaran.

Oil production falling

Production of oil in Islamic State controlled areas, which accounts for around 43 per cent of its revenue, has fallen from 33,000 barrels per day to 21,000 barrels per day over the last 15 months.

"This means that the income the group is generating from the sale of crude has fallen by approximately 26 per cent,” said Carlino.

Air strikes against IS have targeted major oil fields operated by the group. “However, oil production has not completely stopped,” said Strack.

“Due to the Islamic State’s enduring capacity to repair, or improvise ways of working around disabled infrastructure, we should look at this as an interruption of production, not a complete stoppage.”

However, oil prices have not been increased. “Rather, we assess that this reflects the Islamic State’s priority interest in quick sales of the oil in order to generate cash," added Strack.

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