The US-led coalition that has been bombing IS fighters in Iraq and Syria since August last year has started targeting fuel tankers that move oil around Syria and provide IS fighters with vital funding.
In just two strikes last month, coalition planes destroyed about 400 tankers that were lined up in the desert waiting to take on illicit oil.
The military warned truck drivers ahead of the strikes, giving them a chance to run for their lives. The Pentagon has said the drivers were not thought to be jihadists, but the decision to warn them infuriated hawks in the US Congress.
Speaking to Pentagon reporters on condition of anonymity, the official said the IS group had been making between $40 million and $48 million a month from oil sales.
The number was lower now, he said, but it would take weeks of analysis to provide an updated figure.
"It's definitely hurting ISIL," he said, using an alternate acronym for the IS group. "This is their primary source of revenue... that is going down by the day."
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The official also disputed claims Turkey is allowing IS oil to cross its border on a large scale.
"You are talking about a bunch of mules with sacks of oil on them," he said. "A few barrels here and there that are crossing the border ... used locally in that area."
The official said the IS group is not extracting oil from Iraq, and a refinery near the town Baiji is inoperable.
Further adding to the group's woes are record-low prices making black-market oil less attractive.
The official did acknowledge, however, that dwindling petro-cash means the jihadists are likely to turn to other sources of revenue, such as kidnapping and extortion.
Military analysts scored a breakthrough in May when a US commando raid in Syria killed Abu Sayyaf, a senior figure from the IS group and its "oil emir," the official said.
"With that raid, we got this enormous amount of information that was very detailed as to how they operated their energy sector, and allowed us to learn more about the operation and how to attack it or address it," the official said.
He also cautioned that IS fighters were eying Libya's oil fields as potential revenue sources.