By David McCabe and Laura Barron-Lopez - 10/23/14 12:02 PM EDT
The Islamic State in Iraq and Syria (ISIS or ISIL) has made roughly $1 million a day off of black market oil sales since June, a Treasury Department official said on Thursday.
According to the prepared text of his remarks at the Carnegie Endowment for International Peace in Washington, Cohen said that since mid-June ISIS “has earned approximately $1 million a day from oil sales.”
In a White House briefing later on Thursday, Cohen clarified that that $1 million figure is "pre-airstrikes," and admitted that the U.S. does not know how much the terror group is making today now that military efforts have begun to "impair" oil sales.
"There is no question that ISIL is one of best funded terrorist organizations that we have confronted," Cohen said.
“Our best understanding is that ISIL has tapped into a long-standing and deeply rooted black market connecting traders in and around the area,” Cohen said. “After extracting the oil, ISIL sells it to smugglers who, in turn, transport the oil outside of ISIL’s strongholds.”
Cohen added that the Treasury also knows the terror group “controls oil refineries of various sizes and output capacities, and earns some revenue from the sale of refined petroleum products.”
ISIS is selling the oil to middlemen — including some in U.S. ally Turkey — who then resell it, according to Cohen.
In September the Treasury Department announced plans to “intensify our effort to undermine” the terror group’s oil sales.
Cohen said U.S.-led military offensives against ISIS have put a dent in their oil production.
“There are good indications, however, that recent coalition military efforts have begun to impair ISIL’s ability to generate revenue from oil smuggling,” he said. “Airstrikes on ISIL oil refineries are threatening ISIL’s supply networks and depriving it of fuel to sell or use itself.
Cohen said ransoms from kidnappings are also a revenue stream for the group.
While ransoms are irregular, they are significant when they do arrive. Cohen estimated that ISIS has made $20 million off of ransom this year.
In recent years, kidnapping has become one of the financial drivers of global terrorism. While the United States does not pay ransoms for its citizens, some European countries do.
In July, The New York Times reported al Qaeda and its affiliates had received $125 million in ransom payments since 2008, most of it from European nations.
ISIS also raises money by asking for payment from people who pass through or live in its territory. Cohen called this “a sophisticated extortion racket" in his remarks.
“It is theft, pure and simple,” he said, adding that the group also benefits from more general criminal activity — like robbing banks — and from wealthy donors.
This story was updated at 1:12 p.m.