BAGHDAD - Islamic State, pushed off more than half the Iraqi territory it seized in 2014, has suffered a near collapse in revenue from oil smuggling, officials say, forcing it to cut fighters' pay, levy new taxes and raise fines for breaking its religious code.
The jihadist group has lost control of a series of oil fields, and is having to sell what production that remains at steep discounts to persuade truck drivers to collect it and run the gauntlet of US-led air strikes.
Alongside taxes, ransoms and antiquities trading, oil has been a major fundraiser for Islamic State operations. At one point it made millions of dollars a month in sales to neighboring Syria and Iran, or to makeshift local refineries.
However, advances by Iraqi government and Kurdish forces plus Shi'ite Muslim militias have left the militants with partial access to just two of the five Iraqi oilfields they once controlled. This has cut smuggling by at least 90 percent, according to security and municipal officials.
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