October 14, 2014 / 10:22 AM / 3 years ago

Islamic State oil production reduced by air strikes: IEA

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LONDON (Reuters) - U.S.-led air strikes have significantly reduced Islamic State's ability to produce, smuggle and refine oil, the International Energy Agency said in its monthly report on Tuesday, citing Western and Iraqi officials.

The coalition's targeting of IS-held oil infrastructure has knocked crude production down to around 20,000 barrels per day (bpd) from a high of about 70,000 bpd achieved after the group expanded its territory over the summer, the report said.

The United States and its allies, including Saudi Arabia and the United Arab Emirates, began launching air strikes against Islamic State in Iraq in August, and in Syria in September, including targeted strikes against oilfields and refineries controlled by the group.

In parallel, the governments of Turkey and Iraq's Kurdistan Region have cracked down on IS's smuggling of crude oil, which had brought in revenue estimated at $1 million to $3 million for the radical Sunni Islamist group.

The crackdown has cut smuggling to less than 10,000 bpd from a high of 30,000 bpd, unnamed officials said in the report.

As well as production capacity, Islamic State captured up to 3 million barrels of crude oil stocks from storage facilities and pipelines during its rapid advance through Iraqi territory, the report said.

Air strikes have also destroyed dozens of small-scale or "teapot" refineries controlled by the group, which have sprung up in Syria since the beginning of the civil war in 2011.

Islamic State needs access to gasoline and diesel to fuel its war effort, and knocking out the refineries will curtail its ability to use the tanks and other military vehicles which it has captured from Syrian and Iraqi forces.

The group has launched waves of attacks against Baiji, Iraq's largest refinery, since June, but failed to capture it.

"With their oil assets diminished, the militants are determined to gain access to additional sources of fuel and

revenue," the IEA said.

Reporting By Sam Wilkin, editing by David Evans

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