Islamic State militants have made more than $US500 million trading oil with significant volumes sold to the government of Syrian President Bashar al-Assad and some finding its way to Turkey, a senior US Treasury official says.
A US-led coalition is bombing the hardline Sunni group, as is Assad's only big-power supporter Russia, in an attempt to kill its leaders and cripple the oil wells which the group uses to finance its rule and attacks abroad.
In one of the most detailed public explanations of IS's oil trade, US Treasury Department official Adam Szubin said militants were selling as much as $US40 million ($A54.88 million) a month of oil at the installations which was then spirited on trucks across the battlelines of the Syrian civil war and sometimes further.
"ISIL is selling a great deal of oil to the Assad regime," Szubin, acting under secretary for terrorism and financial intelligence with the Treasury, told an audience at Chatham House in London on Thursday.
"The two are trying to slaughter each other and they are still engaged in millions and millions of dollars of trade," Szubin said of Assad's government and IS.
The "far greater amount" of IS oil ends up under Assad's control while some is consumed internally in IS-controlled areas in Syria and Iraq. Some ends up in Kurdish regions and some in Turkey, he said.
"Some is coming across the border into Turkey," Szubin said.
"Our sense is that ISIL is taking its profits basically at the wellhead and so while you do have ISIL oil ending up in a variety of different places that's not really the pressure we want when it comes to stemming the flow of funding - it really comes down to taking down their infrastructure," he said.
Szubin said it was unclear whether the $US40 million a month estimate could be multiplied over a year. But in remarks prepared for delivery, he said Islamic State had made more than $US500 million from the oil trade, but did not give a more specific time period.
After Turkey downed a Russian fighter jet last month, Russian President Vladimir Putin said he had intelligence that large amounts of oil and petroleum products were moving across the border from IS territories to Turkey.
The son of Turkish President Tayyip Erdogan has denied Russian allegations that he and his family were profiting from the illegal smuggling of oil from IS-held territory.
"There is no question that better security, closing the Turkish border to flows is a key component right now and we are looking to the Turks to do more in that respect," Szubin said.
"It's not just a financial issue - it is about foreign terrorist flows, it's about weapons and it's about financing. I think securing that border would pay major dividends in terms of intensifying the pressure and also reducing the threat."
In an attempt to cut militants' links to the global financial system, Szubin said the US had worked with Iraq to close down dozens of bank branches in IS-held territories. Szubin said militants had looted up to $US1 billion from bank vaults in Syria and Iraq, but he said IS's oil trade was the main target.
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