WASHINGTON (REUTERS) - Air strikes, a drop in the price of oil, and counter-smuggling efforts by neighboring countries have combined to cut Islamic State's oil revenues in half to about US$250 million (S$340 million) a year, a senior US Treasury official said on Wednesday.
A US-led coalition has targeted the ultra-hardline Sunni Islamist militant group with airstrikes since it seized control of parts of Iraq and Syria in 2014.
The US military launched an intensified effort in October to go after its oil infrastructure in hopes of cutting funding to the group, which US officials call the wealthiest terrorist group of its kind.
Those strikes, along with a drop in the international price of oil, counter-smuggling efforts by Turkey, and difficulties Islamic State in Iraq and Syria (ISIS) has in transporting its oil across battle lines have combined to halve its oil revenues, said Daniel Glaser, assistant secretary for terrorist financing at the US Treasury's Office of Terrorism and Financial Intelligence.
"The number that we had been giving previously until about early this year was US$500 million a year off of oil sales. I think they're substantially less than that now," Glaser told a think-tank event in Washington.
"I think they probably make about half of what they previously made."
The group also earns about US$360 million per year from taxation in the areas it controls, Glaser said.
Cutting its taxation revenues is challenging because it occurs internally within ISIS territory, he said.
One approach he is looking at is drying up liquidity, or the availability of cash, to ISIS-held territory, he said.
"That prevents them from taxing, it also prevents them from profiting from oil sales because I think the vast majority of their oil profits are from oil sold internally within ISIL-controlled territory," he said, using an acronym for the group.
A US military official said in January that the air campaign had reduced ISIS oil revenue by about 30 per cent.
Despite the cuts in its revenue, the group still controls much of its border-spanning "caliphate," inspires global affiliates and is able to orchestrate deadly external attacks.