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The so-called Islamic State or ISIS is raking in millions of dollars from selling oil on the black market. The U.S. government says those profits are funding the militants campaign in Syria and Iraq. Now the U.S. is trying to targeting shady groups that buy oil from ISIS as NPR's Jeff Brady reports.

JEFF BRADY, BYLINE: The group calling itself Islamic State has a few sources of income, ransom payments and robbing banks among them. But the U.S. government says the largest service of money is from Syrian and Iraqi oil facilities ISIS has taken over. Government estimates show ISIS was earning a million dollars a day from oil before recent airstrikes destroyed some refineries and storage tanks. David Cohen is Treasury Under Secretary for Terrorism and Financial Intelligence. The substantial wealth of the group he calls ISIL is a new kind of challenge.

DAVID COHEN: With the important exception of some state sponsored terrorist organizations, ISIL is probably the best funded terrorist organization we have confronted.

BHUSHAN BAHREE: I call it the great enabler ISIL if you will, that oil is really enabling them to do what they want to do.

BRADY: Bhushan Bahree is with the research firm IHS and an expert on the Middle East oil business. On top of the million dollars-a-day the group was earning from selling crude on the black market, Bari says ISIS was pumping another million dollars' worth of oil a day for its own needs. U.S. airstrikes destroyed some of that production, but it's difficult to say exactly how much and Bari says some facilities can be replaced, such as small mobile refineries.

BAHREE: A lot of them are mounted on skids and they just roll them up on pickup trucks, move them to another location, pull them off and refine, just very basic products like low-quality diesel, which is OK for trucks and Humvees and things like that.

BRADY: To replace one of these all you have to do is go to the Internet, type in, mobile refinery, and you you'll find them for sale. Treasury Under Secretary David Cohen says ISIS uses long established smuggling networks in the region to sell oil. He says the U.S. has a plan to undermine the group's finances. Part of that is interrupting oil revenues by targeting those buying the crude.

COHEN: At some point there is someone in that chain of transactions who is involved in the legitimate or quasi-legitimate economy. They have a bank account, their trucks may be insured, they may have licensing on their facilities.

BRADY: Cohen says the department is working to identify those people now and anyone caught moving ISIS oil could have their assets frozen. He says the U.S. can make it very difficult for them to find a bank anywhere that will even touch their money. One buyer that Cohen named yesterday is the Syrian government. Bhushan Bahree says that just illustrates how complex the relationship is between Syria and ISIS.

BAHREE: On the one hand, they're fighting the Syrian military, on the other hand they're selling oil to them.

BRADY: As the U.S. tries to cut off ISIS oil revenue, the group's expenses are rising. Holding on to territory means ISIS must provide basic services like electricity and water. That's expensive in a war zone. The U.S. hopes squeezing ISIS will help weaken the group's hold on power. Jeff Brady, NPR News. Transcript provided by NPR, Copyright NPR.

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