Islamic State Monthly Revenue Drops to $56 million, IHS Says

Oil production down to 21,000 barrels per day from 33,000; New taxes on broken satellite dishes and fines for driving on wrong side of the road

LONDON--(BUSINESS WIRE)-- The Islamic State’s monthly revenue has dropped by almost 30 percent in the last year, according to new analysis released today by IHS Inc. (NYSE: IHS), the leading global source of critical information and insight.

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The latest report from the team responsible for the IHS Conflict Monitor outlines the decline in primary revenue sources for the Islamic State. “In mid-2015, the Islamic State’s overall monthly revenue was around $80 million,” said Ludovico Carlino, senior analyst at IHS. “As of March 2016, the Islamic State’s monthly revenue dropped to $56 million.”

Around 50 percent of the group’s revenue comes from taxation and confiscation, while around 43 percent comes from oil revenue. Drug smuggling, the sale of electricity and donations make up the remainder.

“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,” Carlino said.

Fewer people to tax, less revenue for the caliphate

The Islamic State collects the majority of its monthly revenue from taxation and confiscation. However, income from these activities has fallen by approximately 23 percent since summer 2015.

“The Islamic State has lost about 22 percent of its territory in the past 15 months,” said Columb Strack, senior analyst at IHS. “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.”

The general decline in income for the group is also affecting other financial streams, such as the money generating from kidnapping, drug smuggling and taxation on bank account holders and transactions.

New taxes indicate financial difficulties

“Our research has found that the Islamic State is increasing taxes on basic services and coming up with new ways to get money from the population,” Carlino said. “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.”

To make up for lost revenue, the Islamic State is also imposing fines. “You can be fined for driving on the wrong side of the road and for not being able to answer questions correctly on the Quran,” Carlino said.

The Islamic State has also started to accept payment of fines in cash as an alternative penalty to the hudud (corporal punishments proscribed under Shari’a law). As the Islamic State considers hudud punishments as the backbone of its Shari’a law-based governance system, this new stance represents a strong indicator of the financial difficulties the group is going through. However, there is no indication as of yet that this increased burden of taxation has triggered even localised discontent among the population living in the Islamic State’s caliphate.

Decline in overall production of oil

The latest IHS Conflict Monitor report also highlights the decline in overall production of oil. “Our research and analysis indicates that the production of oil in the Islamic State-operated oilfields has dropped to approximately 21,000 barrels per day, from the 33,000 we saw during summer 2015,” said Ludovico Carlino, senior analyst at IHS. “This means that the income the group is generating from the sale of crude has fallen by approximately 26 percent”.

According to the report, this decline is highly likely to reflect the intensification of the US-led coalition’s military, and to a lesser extent, Russian, efforts to degrade the Islamic State’s capability to produce oil. Almost all the main oilfields operated by the group have been targeted by airstrikes, predominantly by the US-led coalition, resulting in reports of extensive structural damage.

“However, oil production has not completely stopped,” Strack said. “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.”

Significantly, the decline in production has not been followed by the Islamic State significantly raising the price of its oil. “This is not due to any reduction in demand on the black markets in Syria and Iraq,” Carlino said. “Rather, we assess that this reflects the Islamic State’s priority interest in quick sales of the oil in order to generate cash.”

About the IHS Conflict Monitor

The IHS Conflict Monitor records about 1,000 manually geocoded indicator events for Iraq and Syria every week from social media and other open sources, systematically rated for reliability. It is a monthly deliverable, which includes analysis, data and maps. The team provides regular updates on Islamic State revenue.

The IHS Conflict Monitor includes regular analysis of the data providing unparalleled insight into the structure, operations, strengths and vulnerabilities of the Islamic State. The dataset reaches back to January 2014, delivering unique data insights into the tactics, activity and capabilities of armed actors, as well as mapping the progression of the conflict in unprecedented detail.

About IHS (www.ihs.com)

IHS (NYSE: IHS) is the leading source of insight, analytics and expertise in critical areas that shape today’s business landscape. Businesses and governments in more than 140 countries around the globe rely on the comprehensive content, expert independent analysis and flexible delivery methods of IHS to make high-impact decisions and develop strategies with speed and confidence. IHS has been in business since 1959 and became a publicly traded company on the New York Stock Exchange in 2005. Headquartered in Englewood, Colorado, USA, IHS is committed to sustainable, profitable growth and employs nearly 9,000 people in 33 countries around the world.

IHS is a registered trademark of IHS Inc. All other company and product names may be trademarks of their respective owners. © 2016 IHS Inc. All rights reserved.

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Source: IHS

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