US Sanctions On Russia’s Lukoil May Shut Down Production At Basra Oil Field

 

American sanctions on Russia are having a big impact upon Iraq. The Russian company Lukoil has told Baghdad it can no longer operate the West Qurna 2 oil field in Basra due to the Trump administration.  

 

In early November Lukoil sent a letter to the Oil Ministry saying it would not be able to operate the West Qurna 2 field anymore due to U.S. sanctions. Those go into effect on November 21. It said that it would withdraw in 6 months if the issue is not resolved.

 

As a result the State Organization for Marketing Oil has cancelled petroleum shipments from West Qurna 2, the government has halted all payments to the company, while the firm has not paid its workers for 6 weeks.

 

The Russian company wanted to sell its assets to a Swiss commodities trader Gunvor. That was blocked by the U.S. Treasury Department that claimed Gunvor was linked to Moscow.

 

Iraq can’t buy out the company because it is too costly.

 

Reuters reported that Iraq is going to ask Washington for a 6 month exemption from sanctions so that it can find a solution. What that will be is unknown. A senior Basra Oil Company official told Iraq Oil Report that there is no plan for what to do.

 

Iraq is the most oil dependent country in the world. It is trying to boost production and exports to bring in as much revenue as possible. This is because petroleum prices are dropping and it has a gigantic budget and a growing deficit that could push it into a financial crisis. The loss of West Qurna 2 which accounts for roughly 9% of the nation’s output for a period is obviously a setback for this strategy.

 

SOURCES

 

Al-Jabiri, Jassim, Al-Aqily, Ali, “U.S. sanctions on Lukoil threaten Iraq oil production drop,” Iraq Oil Report, 11/11/25

 

Al Masalah, “Iraq moves for temporary exemption from US sanctions,” 11/17/25

 

Mohammed, Aref and Rasheed, Ahmed, “Exclusive: Lukoil declares force majeure in Iraq over US sanctions, sources say,” Reuters, 11/11/25

 

Salem, Amr, “Russia's LUKOIL explores solutions to continue oil production in Iraq,” Iraqi News, 11/17/25

- “US sanctions force Russia’s LUKOIL to declare crisis in Iraq,” Iraqi News, 11/10/25

 

Al-Samarraie, Jawad, “Financial expert warns of escalating fiscal crisis as Iraq faces real deficit approaching 15 trillion dinars,” Iraqi News, 11/15/25

 

Shafaq News, “Iraq backs Lukoil contracts following sanctions,” 11/17/25