The comments from Total - the first Western oil company to sign binding agreements to develop Iran's oil and gas fields following the end of a previous round of sanctions in 2015 - illustrate the challenge posed by renewed USA restrictions.
Total signed a contract in 2017 to develop phase 11 of Iran's South Pars field with an initial investment of $1 billion, marking the first major Western energy investment in the country after sanctions were lifted in 2016.
So the French energy giant won't commit any more funds to Iran's South Pars 11 project, in which it took a controlling stake previous year.
On May 8, U.S. President Donald Trump announced that the U.S. would withdraw from the Iran nuclear deal and reinstate sanctions that were in force before the implementation of the landmark agreement.
Total said the South Pars project puts at risk the company's large operations in the United States and reliance on US banks for financing of 90 percent of its operations.
European leaders are scrambling to find ways to protect their businesses because Iran has warned that it may start enriching uranium again if it no longer experiences any economic benefit from continuing to honor the nuclear deal.
"Total has always been clear that it can not afford to be exposed to any secondary sanction which might include the loss of financing in dollars by U.S. banks for its worldwide operations", the group said.
In addition, about 14 million barrels of oil products were purchased from, or sold to, entities with ties to the Iranian government, generating 1.1 billion euros of revenue, and a net loss of 5.7 million euros, according to Total.
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USA banks are involved in more than 90 percent of Total's financing operations, American shareholders represent upward of 30 percent of its investors and the company has more than $10 billion of capital employed in the country, it said.
France, Germany and Britain are leading a European effort to safeguard Europe's economic interests but have few options that pose any threat to the United States.
"The fines are in the multibillions these days so it's just not worth the risk for a small piece of business and maybe pleasing a (European) government".
A withdrawal from the Iran project would not affect Total's current overall production targets as the group had since opened up other growth opportunities, it said. "With that in mind it's a logical decision".
Iranian oil minister Bijan Zanganeh said the French firm would not pay a penalty if it pulled out of the project.
Total was the furthest advanced of its European oil major peers in a cautious feeling out of upstream opportunities in Iran since the easing of worldwide sanctions at the start of 2016.
Industry sources told Reuters this week that China's CNPC, which holds a 30 percent stake in the South Pars project, was ready to take over Total's majority stake in the project if it pulled out.