According to the US Department of Treasury, ISIS has made more than $500 million trading oil.
A treasury official said ISIS’ “primary customer” has been the government of Syria’s President Bashar al-Assad, despite its ongoing battle to overthrow the regime.
ISIS had also looted up to $1 billion from banks in territory it held, Adam Szubin told the BBC.
A US-led coalition has been bombing ISIS targets, including oil facilities, in Syria and Iraq for over a year.
“The two are trying to slaughter each other and they are still engaged in millions and millions of dollars of trade,” Adam Szubin said of Syria and ISIS, in comments reported by Reuters news agency.
The group was estimated to be making as much as $40 million a month from the oil trade, including from buyers in Turkey, he added.
ISIS’ other main source of funding comes from extorting money from people in the territory under its control, said Adam Szubin.
Cutting off the group’s cash flow was a key part of the coalition strategy to defeat ISIS, he said.
Unlike other designated terrorist groups, ISIS did not rely on funding from foreign donors, but generated money from its own operations, Adam Szubin said.
The US-led coalition has recently launched a military campaign, dubbed Tidal Wave 2, intensifying air strikes on ISIS oil fields, refineries and tankers being used by the group.