U.S. Sanctions On Iran: Settlement Negotiations, General License X And Status Update

On June 22, 2026, the Office of Foreign Assets Control (OFAC) of the U.S. Department of Treasury created an authorization for American businesses to engage in commercial transactions involving Iranian oil. This is a significant change in U.S. sanctions policy and is a direct result of the ongoing U.S.-Iran negotiations.

Specifically, OFAC issued “General License X,” which indicates that transactions prohibited by a number of Iran related sanctions that are ordinarily incident to the “production, sale, delivery, or offloading of crude oil, petrochemical products, or petroleum products of Iranian origin, including transactions involving vessels blocked” under several U.S. sanctions authorities, are authorized through 12:01 a.m. eastern daylight time on August 21, 2026. A note to this main provision of General License X allows for the importation of these products of Iranian origin into the United States and for the payment of funds owed to Iran, the Government of Iran, or any blocked person for the purchase of these products of Iranian origin in U.S. dollar-denominated funds. Notably, transactions involving persons located in or organized under the laws of the Democratic People’s Republic of Korea, the Republic of Cuba, the Covered Regions of the Ukraine (defined by E.O. 14065), and the Crimea Region of the Ukraine (defined by E.O. 13685) are not covered by General License X. 

General License X was put into place by OFAC in partial implementation of a Memorandum of Understanding (MoU) in regard to Operation Epic Fury that was signed by the United States and the Islamic Republic of Iran on June 17, 2026. The MoU sets out certain principles for reaching a final agreement and includes a commitment by both parties to continue negotiating to achieve a final resolution to the military conflict that began in February.

The changes to the sanctions on Iran indicated in the MoU also implicate many U.S. and international sanctions programs that are not addressed in General License X. In fact, with respect to sanctions, the United States agreed, following successful negotiations with Iran, to the termination of “all types of sanctions against the Islamic Republic of Iran, including United Nations Security Council resolutions, i.e., IAEA [International Atomic Energy Agency] Board of Governors resolutions and all unilateral U.S. sanctions, primary and secondary, in an agreed-upon schedule as part of the final deal.” The MoU makes sanctions a priority issue for negotiations with Iran, and the United States has also committed not to impose any new sanctions on Iran. General License X was put into place by the United States in implementation of its commitment in the MoU, even prior to the full termination of sanctions, “to issue waivers for the export of Iranian crude oil, petroleum products and derivatives, and all associated services, including banking transactions, insurances, transportation, etc.”

The MoU also indicates that “[t]he United States of America undertakes to make fully available for use the frozen or restricted funds and assets of the Islamic Republic of Iran upon the implementation of the MoU.” These funds are frozen pursuant to sanctions on Iran, and the United States and Iran will “mutually agree on the procedures related to the release of these funds during negotiations.” The MoU specifies that these procedures will include making such funds “fully usable for payment to any ultimate beneficiary designated by the Central Bank of the Islamic Republic of Iran. The United States of America undertakes to issue all necessary licenses accordingly.” Recent statements by President Trump indicate that this unfreezing of assets will be related to a $300 billion plan for the reconstruction and economic development of Iran. With respect to that plan, the MoU indicates that “[a]ll required licenses, waivers and permissions needed for the relevant financial transactions will be granted by the United States of America.”

As to the status of the Strait of Hormuz, the MoU provides that “[u]pon the signing of this MoU, the Islamic Republic of Iran will make arrangements using its best efforts for the safe passage of commercial vessels with no charge for 60 days only from the Persian Gulf to the Sea of Oman and vice versa.” The agreement also provides that the traffic of commercial vessels will immediately begin and will be instated by 30 days following the removal of obstacles put in place by Iran, which likely refers to the removal of sea mines. The MoU envisions that the permanent arrangements for passage through the Strait of Hormuz will be decided in conjunction with input from other states in the Gulf region and in compliance with applicable international law. In addition, the United States committed immediately upon signing the MoU to begin the removal of the naval blockade of the Islamic Republic of Iran and to fully end it within 30 days.

As of today, General License X is the only official guidance from OFAC in relation to Iran sanctions programs, which are extensive and cover many areas in addition to transactions involving oil and petroleum. Notably, other states and the European Union also have sanctions on Iran, and compliance with those laws must be carefully considered. In addition, President Trump indicated that the U.S. will be vigilant in monitoring Iran’s compliance with the MoU and the eventual final deal, and the U.S. could take a variety of actions if Iran does not move forward in good faith. In short, the international business community should carefully monitor the situation.

U.S. and multinational companies must be vigilant in their compliance efforts with evolving sanctions and export control regulations. It is critical that every company employ a risk-based approach to sanctions and export compliance by developing, implementing and updating its own compliance policies and procedures.

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