The deal would have created the world's fourth-largest oil producer, but the fate of the merger had been up in the air since the government accused Khodorkovsky, along with a number of associates, of financial crimes, including fraud and tax evasion..

News of the suspension hit the Russian share market hard with Yukos share prices plunging 10% and Sibneft shares 6% within an hour of the announcement.

The two companies had announced their merger in April, when Yukos said it would acquire Sibneft for $3 billion in cash and a share swap. Sibneft's core shareholders have already paid cash and swapped their shares to become owners of 26.01% of Yukos. The deal was finalised in late September.