Will falling oil prices impact ISIS terror operations?

Are falling oil prices impacting ISIS terror operations?

Mark Stys and Stephen Lari on how the terror group is able to fund its organization

The drop in oil prices by nearly 45 percent since mid-June has raised questions over what impact this could have on the terror group ISIS' operations within Syria and Iraq.

Since expanding its territorial control over the summer, ISIS has built several small refineries to extract oil to use as fuel for vehicles and to fund its operations. The Defense Department in September stated that the terrorists make a $2 million-a-day profit from oil sales on the black market.

Fox News National Security Analyst KT McFarland spoke to oil expert Mark Stys and investor Stephen Lari about this developing situation.

Stys and Lari believe the drop in prices won’t have a short-term impact on ISIS.

“ISIS was selling oil around $40 a barrel or maybe a little less [and] with the drop in price to about 60 when oil was previously trading around $85 dollars a barrel, we would still expect them to be trading at a deep discount," said Stys, who is chief investment officer of WS Wealth Management.

He added, “it will affect them in the long haul, but right now I don’t think that is a very significant effect in price.”

Initially, there were concerns ISIS would take control over a significant portion of Iraq’s northern oil fields.

Lari, principal of the Claremont Group, which has several investments in the Kurdish region of Iraq, says so far that hasn’t happened. “Along with the pressure that the coalition is putting on their military, activities leads to a likely scenario where their costs are increasing and they are desperate for funds. Anything that makes it more difficult to bring oil to market is going to impede their ability to operate.”

ISIS’ location has proven beneficial in their ability to sell oil on the black market. “The area in which they operate geographically, there are a lot of ways to move oil to avoid the official channels … you also got the need in the areas they control to provide power, oil, gasoline so I think there are many users,” said Stys.

Both agree, the only way to have a significant impact on ISIS is to stop their flow of oil to potential buyers.