Iraq Oil Report reports: An intensifying campaign of U.S. air strikes on the self-proclaimed Islamic State (IS) has nearly shut down its oil operations in Iraq and has hampered its more lucrative business in Syria, eroding the group’s largest source of financing and threatening its ability to govern territory.

Iraq Oil Report has compiled a comprehensive history of the IS oil sector based on the organization’s own records, details of which have just been declassified by the U.S. government and are being published here for the first time. Those accounts have been broadly corroborated by the first-hand testimony of residents and oil workers in IS-occupied territory.

They show that, until recently, nearly 2,000 IS oil workers, many recruited from abroad, were able to outfox early U.S. attempts to derail the group’s oil operations. From the end of 2014 through May 2015, even after being hit by a series of air strikes, the highly bureaucratic and organized operation generated as much as $40 million per month from the sale of crude oil. (The IS organization generated millions more by taxing transportation and refining, though the U.S. officials declined to give more detailed figures.)

“From the documents, we see this: oil has traditionally been approaching 50 percent of their profits. And the other 50 percent was the total of all the other things,” said Amos Hochstein, the State Department’s Special Envoy for International Energy Affairs, who is at the center of the U.S. government’s efforts to identify weaknesses in the IS group’s oil sector. [Continue reading…]