*Thank you to Sam Guerrero, 2026 Akin Summer Associate, for his valuable collaboration on this article.

Highlights

• On June 22, 2026, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued Iran-related General License X (GL X), authorizing through August 21, 2026 a range of transactions and activities intended to facilitate the export of Iranian-origin crude oil, petrochemical products and petroleum products (Authorized Products) otherwise prohibited under multiple U.S. sanctions authorities.
• GL X represents the first step in a broader sanctions relief package described in the June 17, 2026 U.S.-Iran Memorandum of Understanding negotiated in Islamabad (Islamabad MOU) intended to end military hostilities, reopen the Strait of Hormuz and pave the way towards a final deal that addresses broader issues including Iran’s nuclear program and the post-conflict reconstruction of Iran.
• Iran has historically evaded sanctions by using “shadow fleet” vessels and shell companies to conduct oil sales, which are a mainstay of Iran’s economy and will be central to its recovery from months of war. 
• While the breadth of the authorization in GL X is unprecedented and allows payments in U.S. dollars, its limited duration, applicable Iran sanctions measures imposed by other jurisdictions (such as the United Kingdom, the European Union (EU) and Switzerland), and other risk factors raise significant compliance and commercial issues for firms considering involvement in newly authorized transactions.
• Unless OFAC extends GL X, the trading of Authorized Products already loaded on vessels may be the type of transaction that firms can most realistically conduct during the authorization’s limited duration. However, many “shadow fleet” tankers that Iran has historically used for such shipments are sanctioned under U.K., EU and Swiss sanctions programs, notably those targeting Russia, which are not mitigated by GL X and remain in full effect.
• In addition, such risk factors have often led to hesitation by financial institutions, maritime insurance firms and other critical service providers in supporting transactions associated with Iran and other countries subject to multijurisdictional sanctions, even when authorized by OFAC.
• Implementation of the Islamabad MOU’s provisions for more significant phases of sanctions relief, which would eventually culminate in the full termination of U.S. sanctions on Iran, will depend heavily on the extent to which the two sides make progress on other core issues.

Overview of General License X

Scope of Authorization

GL X implements a provision in the Islamabad MOU for certain “immediate” U.S. sanctions relief by authorizing all transactions that are ordinarily incident and necessary to the production, delivery, sale or offloading of Authorized Products through August 21, 2026. Subject to the exclusions noted below, the authorization applies to all such transactions that are prohibited by the specific Iran, Russia-related, counter terrorism, and weapons of mass destruction proliferation regulations and executive orders referenced in GL X, including transactions involving vessels blocked under those authorities. Authorized transactions include a range of vessel-related activities, such as anchoring, crewing, management, insurance and piloting. The authorization in GL X also applies to the importation into the United States of Authorized Products where ordinarily incident and necessary to an authorized sale, delivery or offloading. Further, any payment of funds owed to Iran, the Government of Iran or any blocked person for such purchases may be made in U.S. dollar-denominated funds.

Exclusions

GL X does not authorize any transaction involving a person located in or organized under the laws of North Korea, Cuba, certain regions of Ukraine occupied by Russia, or any entity owned or controlled by, or in a joint venture with, such persons. Nor does it authorize any other transaction prohibited by any sanctions regulations or executive orders other than the ones expressly referenced in GL X.

Further Sanctions Relief Measures Under the Islamabad MOU

The June 17, 2026 Islamabad MOU provides for the negotiation of a “final deal” within 60 days, though this timeline is extendable by mutual consent. Beyond the immediate relief provided by GL X, the United States would implement further, phased steps to relieve sanctions—conditioned on Iran’s compliance with specified commitments—and culminating in comprehensive termination of sanctions as part of the final deal. The Trump administration’s stated approach of “relief for performance” would include progress on nuclear material and enrichment issues and Iran’s reopening the Strait of Hormuz on a toll-free basis for commercial vessels for 60 days.

The Islamabad MOU describes the following additional near-term sanctions relief measures:

• Sanctions standstill: The United States would impose no new sanctions on Iran during the 60-day period.
• Use of restricted funds: The United States would begin facilitating Iran’s use of funds (including proceeds from past sales of Iranian-origin oil, gas and other commodities), as well as other assets, that are restricted in foreign bank accounts due to U.S. secondary sanctions. The Islamabad MOU indicates that the Central Bank of Iran could direct funds to be paid to identified beneficiaries, presumably for purchases of certain goods and services. However, how these funds would be made available to Iran, and whether Iran would recoup full possession of any funds through direct transfers, remains unclear.

If the parties reach a final deal, the Islamabad MOU contemplates:

• Reconstruction fund: The United States would provide sanctions relief necessary to implement a $300 billion reconstruction and economic development fund established with regional partners. The mechanism by which this fund would be implemented, and how it would be funded, remains unclear.
• Full removal of sanctions: According to an agreed schedule, the United States would pursue the removal of “all types” of sanctions against Iran, including not only multilateral United Nations (UN) and International Atomic Energy Agency (IAEA) measures, but also all unilateral U.S. sanctions, both primary and secondary.

Policy Considerations and Risks

As the first concrete sanctions relief measure following the Islamabad MOU, the breadth of the authorization in GL X is noteworthy. By authorizing the participation of U.S. persons in transactions involving Authorized Products and payments in U.S. dollars, GL X is in some respects broader than comparable measures implemented by the Obama administration related to Iranian-origin oil under the prior Iran nuclear deal, which focused on secondary sanctions relief. Further, GL X’s inclusion of transactions related to the “production” of Authorized Products arguably goes beyond a strict reading of the Islamabad MOU, which refers only to “exports.” Non-U.S. persons generally would not face the risk of secondary sanctions for engaging in or facilitating transactions authorized for U.S. persons under GL X.

However, as a time-limited authorization issued as part of a preliminary agreement to resolve recent military conflict and ongoing security and political concerns, companies should account for the following considerations:

• Durability: The durability of any relief is dependent on the Trump administration’s discretion and could be revoked if it perceives a breach in Iran’s implementation of the agreement. Transactions should be structured on the assumption that the current posture could change quickly.
• Time limit: Because GL X is time limited, a failure to renew the authorization or otherwise lift the underlying sanctions could create compliance challenges for U.S. or non-U.S. firms involved in any transactions involving Authorized Products that remain incomplete when GL X expires on August 21, 2026.
• “Production” activities: GL X itself does not define authorized “production” activities or otherwise delineate the outer bounds of this authorization. However, GL X permits companies to conduct authorized transactions involving the National Iranian Oil Company (NIOC), the state-owned entity that owns and runs Iran’s oil production, due to GL X’s inclusion of the counter terrorism sanctions authority under which NIOC is designated. GL X also permits the export or reexport of U.S.-origin equipment, technology or other hardware to Iran prohibited by the OFAC-administered Iran sanctions program if it is ordinarily incident and necessary to the production of the Authorized Products. Companies should bear in mind that the export of such equipment, technology or other hardware to Iran may independently implicate the Export Administration Regulations (EAR) administered by the U.S. Department of Commerce.
• Continued screening: Although GL X authorizes transactions with persons blocked under multiple specified sanctions authorities, it does not authorize dealings with persons blocked under other sanctions authorities—such as Foreign Terrorist Organizations—or with the categories of persons expressly excluded from its scope. Accordingly, firms must continue to exercise caution in screening counterparties, vessels and other participants to confirm that no separately excluded or sanctioned person, such as the Islamic Revolutionary Guard Corps (IRGC), is involved.
• Russian-origin products: Although GL X covers transactions involving Authorized Products to the extent prohibited by the Russia-related sanctions programs and does not exclude Russian persons as a category, dealings in products of Russian origin are not authorized. Therefore, parties dealing in Iranian-origin Authorized Products sold by Russian counterparties—or transported aboard sanctioned Russian “shadow fleet” vessels—should confirm that no independent Russia-related (or other sanctions program-related) prohibition applies before relying on GL X.
• PGSA/Strait of Hormuz: The Islamabad MOU’s commitment to a toll-free Strait of Hormuz is untested, and it remains unclear how Iran will treat vessels carrying third-country cargo or whether toll demands will resume. On May 27, 2026, OFAC used its counter terrorism sanctions authority to designate the Persian Gulf Strait Authority (PGSA), which collected tolls through fiat currency, digital assets, offsets, informal swaps, or in-kind payments, and compelled vessels to follow IRGC-specified routes near Iran’s coast in return for permission to transit. OFAC guidance remains in effect and warns that toll payments to or guarantees from the Government of Iran or the IRGC for safe passage are prohibited for U.S. persons (including U.S. financial institutions) or U.S.-owned or -controlled foreign entities. Non-U.S. persons—including foreign financial institutions and insurers—risk secondary sanctions and civil or criminal enforcement liability for facilitating such payments. GL X does not authorize payments or other material support to the PGSA in connection with vessels transporting products of Saudi-, United Arab Emirates (UAE)-, Russian- or other origin.
• Payments and fund flows: While GL X permits U.S. dollar payments for authorized purchases, including to the Government of Iran or blocked persons, it does not address Iran’s use of previously restricted funds, which the MOU treats as a separate commitment that has not been well defined. Companies should ensure that payments flow only as GL X authorizes, guard against the diversion of funds or products to non-authorized end uses or persons, and maintain robust diligence and documentation to demonstrate that transactions fall squarely within the license.
• Additional guidance: Given the broader multijurisdictional sanctions landscape and continuing uncertainty regarding prospects for successful conclusion of a fuller agreement between Iran and the United States, as well as ongoing regional instability and other factors, addressing the practical concerns of banks, insurers and other essential service providers will be critical to effectively facilitating transactions authorized by GL X and any further U.S. sanctions relief measures.

Multi-Jurisdictional Awareness: U.K./EU/Swiss Sanctions on Trade in Iranian Oil & Gas

It is essential for companies navigating GL X to keep in mind that the U.K., EU and Switzerland (among other jurisdictions) continue to maintain broad sanctions on Iran. If there is any EU, U.K. or Swiss nexus to a transaction, companies will need to ensure they comply with those sanctions, notwithstanding the existence of GL X. Notably, where transactions pertaining to Iranian-origin oil & gas products are concerned, a U.K. nexus is likely to arise given the central role of the London insurance market—including Lloyd’s of London and the U.K.-based P&I Clubs, which collectively insure the substantial majority of the world’s commercial shipping—in underwriting maritime trade. Further, even in the absence of any U.K., EU or Swiss nexus, companies may nonetheless need to comply with these sanctions regimes due to contractual commitments or requirements.

U.K./EU/Swiss sanctions on Iran include, among others:

• Designations: A significant number of Iranian entities, governmental bodies and individuals are designated, including parties in the energy and financial sectors (e.g., NIOC and National Iranian Tanker Company, both designated by the EU, U.K. and Switzerland, as well as the IRGC Navy Hormozgan Provincial Command, designated by the EU, which is responsible for implementing the toll system in the Strait of Hormuz).
• Requirements for funds transfers (EU/Swiss): Notification and authorization requirements may apply in relation to transfers of funds involving Iranian persons, entities or bodies.
• Oil/gas import ban (EU/Swiss): Prohibition on the purchase, import and transport of crude oil, petroleum, petrochemical products and natural gas of Iranian origin or exported from Iran, with related ancillary services (e.g., financing, insurance and reinsurance) also restricted.
• Vessel servicing ban (EU): Prohibition on servicing vessels owned or controlled by Iranian persons where there are reasonable grounds to determine that they carry sanctioned goods.
• Iranian-flagged/controlled vessels (EU): Prohibition on providing a range of services (e.g., classification, inspection, testing, repair, technical assistance) to oil tankers and cargo vessels flying the Iranian flag or owned, chartered or operated by Iranian persons.
• U.K. vessel measures: Designated Iranian vessels are barred from U.K. ports, and the Secretary of State may move, direct, detain or prevent the U.K. registration of such vessels.

Because of the limited duration of GL X, the trading of Authorized Products already loaded on vessels may be the type of transaction that firms can most realistically conduct under the authorization, unless extended. However, many “shadow fleet” tankers that Iran has historically used for such shipments are sanctioned under U.K., EU and Swiss sanctions programs, notably those targeting Russia, which are not mitigated by GL X and remain in full effect.

Therefore, those seeking to rely on GL X should either confirm the absence of any U.K./EU/Swiss nexus to contemplated Iran-related activities or ensure that they comply with the relevant sanctions regimes. This requires an assessment of any EU, U.K., Swiss, or other relevant jurisdictional nexus, as well as an assessment of the risks posed by any applicable sanctions regimes that continue to apply to such activities, which may necessitate measures such as the recusal of EU persons from trades involving Iranian-origin crude oil or the arrangement of non-U.K. insurance for trades involving U.K.-sanctioned parties.