The boss of French energy giant Total says he will not invest in Iran because it is too risky.
The firm had been due to develop gas fields in the south of the country, but Christophe de Margerie told the Financial Times it would not go ahead.
The announcement comes a day after Iran test-fired a series of missiles, amid weeks of rising tensions with Israel and the US over its nuclear ambitions.
Analysts say the move will be a big blow to Iran's energy industry.
"Today we would be taking too much political risk to invest in Iran because people will say: 'Total will do anything for money'," Mr Margerie told the newspaper.
Early on Wednesday Iran test-fired a missile capable of reaching Tel Aviv.
Iran state media said nine missiles had been fired in total, including a new Shahab-3, with a range of 2,000km (1,240 miles).

Gen Hossein Salami, the Iranian Revolutionary Guard's air force commander, said the tests demonstrated Iran's "resolve and might against enemies who in recent weeks have threatened Iran with harsh language".
State media quoted him as saying: "Our hands are always on the trigger and our missiles are ready for launch."
Tehran has tested the Shahab-3 before, but the latest launch comes amid rising tensions in the region.
William Burns, the top official handling Iranian issues at the US state department, said the launch was "very disturbing, provocative and reckless".
But US officials played down suggestions that the move had brought military confrontation with Iran any closer.
"The reality is there is a lot of signalling going on, but everybody recognises what the consequences of any kind of a conflict would be," said Defense Secretary Robert Gates.
In recent weeks, the US has stepped up the pressure to impose tougher sanctions on Iran and companies that do business with it.
The FT reported that Total was the last major western energy group considering making a significant investment to develop Iran's huge natural gas reserves.