Islamic State's Finances Cut by 30% From Last Year, Report Finds

  • U.S. airstrikes lower oil production to 21,000 barrels a day
  • IHS says that hurts Islamic State's ability to run territory

Members of the Iraqi government forces battle with Islamic State (IS) group fighters east of Ramadi, after they took control of the agricultural area surrounding the eastern part of the capital of Iraq's Anbar province on Jan. 12, 2016.

Photographer: MOADH AL-DULAIMI/AFP via Getty Images

U.S.-led air strikes and territorial gains by forces allied with Russia and Iran have cut Islamic State’s monthly revenue by almost 30 percent over the past year, according to a report by IHS Inc.

The terrorist group, which earns about half its revenue from taxation and confiscation, has lost about 22 percent of its territory in Iraq and Syria over the past 15 months, according to Englewood, Colorado-based IHS, which provides advice to businesses and governments. That will hamper the group’s ability to recruit new soldiers, pay existing supporters and sustain basic services in areas it controls.

“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,” IHS analyst Ludovico Carlino wrote in the report. “There are fewer people and business activities to tax; the same applies to properties and land to confiscate.”

While oil revenue accounts for about 43 percent of Islamic State income, crude production has declined to 21,000 barrels per day from 33,000 a day in the summer of 2015. That reflects the intensification of the U.S.-led coalition’s military efforts to degrade the group’s capability to produce oil, the report said. Almost all the main oilfields operated by the group have been targeted by airstrikes.

‘Key Terrain’

The IHS report supports claims made by U.S. officials last week.

Islamic State “has lost more than 40 percent of the territory it once controlled in Iraq and in Syria,” Colonel Steve Warren, a Pentagon spokesman, said April 13. The group has “not been able to take hold of any key terrain for almost a year now.”

Fighters allied with the U.S., Russia and Iran have made significant gains in the past 12 months, including the recapturing of ancient city of Palmyra last month and territory near the Turkish border.

In January 2016, U.S. airstrikes on energy infrastructure under Islamic State control had reduced the group’s oil revenue by about 30 percent and crude production by one quarter, a Congressional Research Service report said.

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