Russian oil company Lukoil has declared force majeure on operations at Iraq's West Qurna-2 oil field following US sanctions, with Iraq halting all payments to the company in cash and crude oil, Iraqi and foreign agencies reported on November 10.

Lukoil officially notified Iraq's Oil Ministry on November 4 that force majeure conditions were preventing continuation of usual operations at West Qurna-2. The United States imposed sanctions on the company last month as part of President Donald Trump's efforts to increase pressure on Moscow to end its war in Ukraine.

Iraq's State Oil Marketing Organisation (SOMO) cancelled three crude shipments from West Qurna-2 initially scheduled for loading on November 11, 18 and 26, according to four Iraqi sources.

A senior Iraqi oil official said that if issues causing the force majeure are not resolved within six months, Lukoil will cease production and fully withdraw from the project. The company holds a 75% stake in the field, which produced over 480,000 barrels per day in April, according to Interfax.

Declaring force majeure gives Lukoil the right to default on its contractual obligations, though it does not necessarily mean shipments from West Qurna-2 will stop entirely.

Lukoil shares fell 3.37% to RUB5,144.50 ($51.44) on the Moscow Exchange on November 10 following the force majeure declaration, according to Moscow Exchange data. The company became the week's underperformer on the Russian stock market, with shares dropping 3% by the close of trading on November 7 compared to the previous week, whilst the Moscow Exchange index rose 1.3% over the same period.

The sharp decline followed news that the US Treasury Department refused to grant commodities trader Gunvor a licence to conduct business using assets purchased from Lukoil. Gunvor withdrew its offer to acquire Lukoil's international assets, forcing the Russian company to find a new buyer.

Lukoil announced plans to sell its foreign assets at the end of October and is considering offers from potential buyers.

The US Treasury Department's Office of Foreign Assets Control sanctioned Lukoil and Rosneft along with 28 subsidiaries, including Lukoil-Perm, Lukoil-Kaliningradmorneft and Lukoil-Western Siberia. The sanctions freeze all company assets in the United States and prohibit American entities from doing business with them. The European Union imposed similar sanctions on October 23.

The Kremlin called the restrictions an unfriendly move harming progress towards resuscitating relations between Moscow and Washington.