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Oil smuggling continues as Turkey emerges as a key player.

Abu Dhabi: Turkey is the key player in resolving the issue of cross-border smuggling of oil by the Islamic State of Iraq and Levant (Isil) as the sale continues in black markets, Middle East experts have said.

The militant group which controls a huge swathe of territory in Syria and Iraq has unleashed terror by killing hundreds of people including two American journalists and a British aid worker in recent times. The group is able to generate more than $2 million (Dh7.34 million) per day by selling oil to middle men and brokers based in Southern Turkey, Syria and Kurdistan.

America has stepped up pressure by launching air strikes and bringing in a large coalition of partners including a number of Arab countries such as Saudi Arabia and the UAE to control the growing threat.

Lina Khatib, director of the Carnegie Middle East Centre, the global think tank based in Beirut said that the key player in the selling of oil on the black market by Isil is Turkey, through which oil was being smuggled with facilitation by Iraqi middlemen.

"Turkey had initially turned a blind eye to the sale of Iraqi and Syrian oil by Isil because it saw the group as a convenient way of eradicating the Syrian regime, and it did not discriminate between Isil and other jihadist groups in Syria," she said.

However, she added that Ankara is deeply concerned about the growth of Isil and its potential to cause instability within Turkey itself, and is also under significant pressure from Europe and the United States to better monitor the black market and to try to halt its activities.

"Turkey has responded by stepping up measures to identify the middlemen who have been handling the sale of smuggled oil, while the US air strikes on oil-rich Kurdish areas have contributed to lessening the extent of smuggling in those areas."

Low price

The Syrian regime has also been a major client of Isil oil, and continues to purchase oil from the group, she said.

"If ISIL can be deprived of the oil black market, this will have a significant impact on its viability."

According to experts, around 60 per cent of oil fields located in the eastern provinces of Syria and seven oil fields and two refineries in Iraq are under the control of Isil.

The oil being sold by the group ranges between $25 (Dh91.75) per barrel to $60 per barrel compared to the current market prices, which on Wednesday traded for about $99 for Brent crude.

Brent is a benchmark for European, African and Middle Eastern oil. However, the illegal sale of oil by Isil will not have any impact on the global oil prices as the quantity traded is too small, they said. It is believed to be smuggling over 30,000 barrels of oil a day.

Luay Al Khatteeb, a visiting fellow at Brookings Doha Centre said that Turkey needs to tighten their border security and stop the smuggling of oil.

"It is in their hands to control this problem but Turkey has a long border of 1200 kilometres which is difficult to control," said Khatteeb.

Richard Mallinson, a geopolitical analyst at the London-based Energy Aspects said that growing international attention on the smuggling issue has created political pressure to crack down on smuggling and also to prevent smuggled crude oil from reaching international markets.

"It is unlikely that local black market sales can be completely halted however, particularly as the conflicts in Iraq and Syria have partially disrupted fuel supplies and created fuel shortages, resulting in buyers turning to the black market."


He said Turkey has the dual challenges of preventing smuggled oil from crossing its border and also ensuring that sufficient supplies of affordable fuel reach markets in southern Turkey to displace the black market.

Carnegie Middle East Centre said that the militant group's oil production methods are generally primitive, but it is able to generate a significant amount of money through sales.

"Most fields are older, meaning oil is harder to extract, requiring special expertise and technology that the group does not possess. Nonetheless, the Islamic State's income from its share of Iraq's oil market amounts to about $1 million a day. Together, Syrian and Iraqi oil generates a maximum of $3 million per day for the group, or about $1 billion per year," an online article in Sada website associated with the centre said.

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Publication:Gulf News (United Arab Emirates)
Geographic Code:7IRAQ
Date:Sep 20, 2014
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