Lukoil Declares Force Majeure at Huge Iraqi Oilfield After U.S. Sanctions

By Charles Kennedy - Nov 10, 2025

Russian oil giant Lukoil has declared force majeure at the 400,000-barrels-per-day West Qurna-2 oilfield in Iraq after the U.S. sanctions on Russia’s top oil firms, sources familiar with the matter told Reuters on Monday. 

Following the October 22 U.S. sanctions on Lukoil and Rosneft, Iraq has stopped all cash and crude payments to Lukoil, according to Reuters’ sources. 

Last week, reports emerged that Iraq’s state oil marketing company SOMO had canceled three crude loadings from Lukoil this month after the U.S. sanctioned the second-biggest Russian oil producer last month. 

The three loadings from Lukoil from its production at West Qurna-2 were scheduled for November 11, 18, and 26, but Iraq apparently doesn’t want to handle the now-sanctioned barrels, market sources told Reuters last week. 

Lukoil has a 75% equity stake in Iraq’s giant West Qurna-2 oilfield, which produces more than 400,000 barrels per day (bpd) of crude oil.

Following the U.S. sanctions on Lukoil and Rosneft, oil traders and operators globally are steering clear of any cargoes of the two biggest Russian oil firms to avoid drawing the attention of the Trump Administration and being slapped with secondary sanctions.

After the U.S. sanctions on Lukoil and Rosneft, “as a result of Russia’s lack of serious commitment to a peace process to end the war in Ukraine,” Lukoil announced it would sell all of its international assets, and reached a preliminary agreement with Switzerland-based commodity trader Gunvor to sell these.

However, Gunvor last week pulled the $22-billion bid for Lukoil’s international business after the U.S. Treasury Department signaled it was not happy with the deal, calling the company a Russian “puppet”. 

“President Trump has been clear that the war must end immediately. As long as Putin continues the senseless killings, the Kremlin’s puppet, Gunvor, will never get a license to operate and profit,” the U.S. Treasury said in an X post.

With no immediate deal for Lukoil to sell international assets, West Qurna-2 being one of the biggest, the near-term production and supply from the giant Iraqi oilfield looks increasingly uncertain.  

By Charles Kennedy for Oilprice.com 

Force majeure refers to extraordinary events or circumstances beyond the control of the parties involved in a 

contract, which can prevent them from fulfilling their contractual obligations.

Definition and Origin

Force majeure is a French term that translates to "superior force." In legal contexts, it describes events that are 

unforeseen and unavoidable, such as natural disasters (earthquakes, floods), wars, riots, or pandemics. The concept is rooted in civil law and is commonly included in contracts to protect parties from liability when such events disrupt the expected course of events. 

Sanctions Force Lukoil Into Force Majeure at Giant Iraqi Oilfield

Iraqi officials had reportedly blocked three Lukoil export loadings at Iraqi terminals, among other measures (USN file image)

Published Nov 10, 2025 5:39 PM by The Maritime Executive

 

American sanctions on Russian oil giant Lukoil have forced the company to declare force majeure for its Iraqi operations, taking nearly 10 percent of the nation's entire production offline through the closure of the giant West Qurna-2 oilfield, according to local and international media sources. The move follows the Iraqi government's decision to cancel payments and export loadings for Lukoil over sanctions concerns. 

West Qurna-2 is a supergiant 12.9 billion barrel reservoir near the port of Basra, Iraq. It was developed by Lukoil and Statoil (now Equinor) in the 2010s, and currently produces about 480,000 bpd of crude. It is part of the braoder West Qurna Field, one of the largest oilfields in the world (by total recoverable barrels). 

Lukoil owns 75 percent of West Qurna-2, and it is the firm's most valuable foreign asset. It had planned to invest billions of dollars to increase the field's output in the years ahead, but given Iraq's strict application of U.S. sanctions on the Russian firm, those plans appear off the table unless there is a change in regulatory circumstances. Iraq has cut off cash payments and in-kind oil allocations to Lukoil, and has reportedly canceled three of the firm's export loadings for the month of November. Lukoil has also reportedly had to lay off its international staff at the West Qurna-2 field, though it has been able to retain its Russian and Iraqi workforce. 
  
If the sanctions situation does not change, local officials told Reuters that Lukoil could exit the field entirely within six months. If the company seeks a buyer for its Iraqi holdings, any would-be purchaser could encounter U.S. compliance difficulties: Russian-linked commodity trader Gunvor was in talks to buy all of Lukoil's international holdings, including West Qurna-2, but backed out after threats of sanctions from the U.S. Treasury Department. 

If Lukoil exits the West Qurna-2 field without selling its rights to a successor, it could clear the way for a Western operator to step in, according to Oilprice.com. American, British and French oil majors might all take an interest in West Qurna-2's abundant reserves. 

In the meantime, the force majeure declaration will lower Iraq's oil production by about 480,000 barrels per day, about 0.5 percent of the global oil market. Brent futures were largely unaffected, closing at $64 per barrel.