Baghdad, Asharq Al-Awsat—Iraq has warned buyers of crude oil that any unauthorized oil purchases made from its territory could be used to fund activities by the extremist militant group, the Islamic State of Iraq and Syria (ISIS).

In a statement on Wednesday, Iraq’s Oil Ministry said: “International purchasers [of crude oil] and other market participants should be aware that any oil exports made without the authorization of the Ministry of Oil may contain crude oil originating from fields under the control of [ISIS]. The only seller of Iraqi crude oil authorized by the Ministry of Oil is [Iraq’s state-owned oil company] SOMO.”

The statement urged buyers to “exercise caution” and to consider that any purchases of Iraqi crude made without the authorization of SOMO “may expose them to sanctions for contributing to the financing of terrorist activities.”

Speaking on condition of anonymity, an informed source told Asharq Al-Awsat that ISIS was indeed selling Iraqi crude from captured refineries and oilfields. He said the crude was being sold to Kurdish traders in the border regions straddling Iraq, Iran and Syria, and was being shipped to Pakistan where it was being sold “for less than half its original price.” He added that many oilfields and refineries in the country remained outside government control.

The accusations of a Kurdish role in the export of oil lifted by ISIS comes amid a long-running dispute between Baghdad and the government of Iraq’s autonomous Kurdish region in Erbil.

The dispute escalated in May when Erbil began exporting oil via the Turkish port of Ceyhan. Baghdad branded the exports as “smuggling” and halted the payment of salaries of public sector employees in the region. Erbil, meanwhile, insists its right to sell oil independently of SOMO is safeguarded in Iraq’s constitution.

Throughout the recent crisis, Iraqi Kurdistan has continued to export oil. A number of tankers loaded with Kurdish oil have been shipping to European countries in recent weeks, and Turkish officials told Reuters on Thursday the pipeline from Kurdistan to Turkey was up and running again after being upgraded.

State of Law coalition MP Alia Nasseef accused the Kurdistan Regional Government (KRG) of being embroiled in trading oil with ISIS. “What is happening shows the extent of the massive conspiracy against Iraq by Kurdish politicians . . . The [illegal] sale of Iraqi oil to ISIS or anyone else is something that would not surprise us.”

Nasseef stressed the importance of “tracking down these unconstitutional activities and raising complaints about nations which participate with them, whether they are the Kurds or ISIS fighters, especially since the oil is being used for terrorist activities, as happened in Syria when they [ISIS] took over some oilfields there.”

Qasim Mohamed Qasim, a former member of the Oil and Gas Committee in the Iraqi parliament, brushed aside the accusations, insisting that the KRG had a right to export oil from its territory, and said Baghdad’s warnings were a smokescreen designed to distract attention from its failure to get to grips with ISIS.

“Attempts by some to link the transparent sale of oil by the [Kurdistan] region to what ISIS is doing in terms of smuggling oil to the black market to sell at low prices are deliberate ploys to shuffle the cards, and to take attention away from what happened in Mosul and Salah Al-Din,” he said.

Qasim went on to claim that Iraqi Kurdistan’s oil exports were both constitutional and permissible under Iraqi law.

“All this talk by officials in Baghdad of the constitutional irregularities [being committed by the KRG] is illogical because the Iraqi constitution is clear regarding the relationship between the federal government and the [autonomous] regions,” he said.

“In addition to this the Oil and Gas Law has yet to be ratified, which gives the Kurdistan region the right to do with the oil what it pleases providing this is within the [parameters of] the Iraqi constitution,” he added.

Qasim claimed that the Kurdistan region had been “forced” into selling the oil “because Baghdad stopped paying [public sector] salaries. Any surplus [from the sales] will be placed in the [Kurdistan region’s] central treasury.”