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Rosneft president Igor Sechin. Image courtesy of Presidential Press and Information Office of Russia.

Morgan Stanley scrapped plans to sell its oil trading and storage business Monday to Russia’s Rosneft after U.S. regulators rejected the deal.

Escalating tensions between the United States and Russia, including sanctions against Russia’s energy and financial sectors, scuttled the sale.

The two companies said the deal will be canceled “due to an objective impossibility to complete the deal that has arisen as a result of regulatory clearances being refused.”

Morgan Stanley will continue to operate the business as it examines a “variety of options for the unit,” the Wall Street Journal said.

The deal has been in the works since December 2013 and was projected to close in the second half of 2014.

The exact value of the sale was never disclosed but was expected to be worth several hundred million dollars.

“Having invested substantial efforts in the deal, the parties regret that it could not be completed,” Rosneft said.