The Guardian reports: A collapse in oil revenues available to Islamic State is likely to have made it increasingly dependent on donations from wealthy Gulf states and profits from foreign exchange markets, the first UK inquiry into the terror group’s funding has heard.

Attacks by the US-led coalition on Isis’s oil installations and convoys are believed to have reduced its oil revenues by more than a third as the funding of the group becomes one of the central fronts in the battle to defeat it in Syria and Iraq.

The government is reluctant to cooperate with the Commons foreign affairs select committee inquiry and has barred the key Ministry of Defence official overseeing efforts to undermine Isis’s funding from giving evidence.

But the Foreign Office minister Tobias Ellwood said progress was being made, even though knowledge of the group’s opaque finances was sketchy and dependent on intelligence finds.

He asserted that the regime’s oil revenue was collapsing and even suggested the group’s Syrian headquarters in Raqqa could implode if and when the Iraqi army retakes Mosul.

But experts have told the committee the UK government may be vastly over-estimating the importance of oil revenue, and underestimating the extent to which Isis is reliant on foreign donors in the Gulf or its manipulation of the Iraqi banking system.

Luay al-Khatteeb from the Iraq Energy Institute claimed the cost of waging war for Isis must be so high, and its oil revenues now so limited, that it must be accessing large-scale donations. [Continue reading…]