But a report from Germany's Bundesnachrichtendienst (BND), the country's foreign intelligence service, argues that “speculation of such high levels of income is hugely overblown.”
They say that the real figure may be less than $100 million a year.
Isis, the world's richest terror group, also has other sources of income, including extortion, art thefts, hostage-taking for ransom and smuggling.
The confidential intelligence report was seen by the Süddeutsche Zeitung and broadcasters NDR and WDR.
Isis now controls oil fields in eastern Syria and northern Iraq which previously produced a total of around 172,000 barrels per day.
The BND believes that fell to 64,000 in August this year and 28,000 in October.
Bombing by the US and allies in recent weeks may have destroyed more than half the oil production sites, the BND believes.
And there are no longer the specialist technicians on the ground who would usually maintain the pressure in the oil wells with gas or water injections, further reducing output.
These factors combined meant that the Islamic fundamentalist group only managed to sell 10,000 barrels per day abroad last month, the agents said, in part because of smuggling routes also being hit by airstrikes.
Most of the oil produced is being used by Isis itself to provide energy to businesses and people living in the areas they control.
This use of the oil is “completely neglected in most evaluations” of the group's revenues, the BND said.
The group's oil supply was insufficient to provide for the civilian needs for electricity generation and vehicle fuel in its territory, they found.
There is evidence that the price of diesel has more than doubled in areas where Isis now holds sway.