United States Issues Temporary Authorization For Transactions Involving Iranian-Origin Oil And Petrochemical Products

In its effort to resolve the conflict with Iran and restore the free flow of cargo through the Strait of Hormuz, the United States has undertaken to relax certain sanctions on transactions involving Iran. While the sanctions relief to date has been focused and time-limited, it covers significant commercial activity. Companies that may be affected by these initiatives should pay close attention to their scope and limitations.

The most recent development came last Monday, June 22, when the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) issued General License X (“GL X”), authorizing certain transactions involving Iranian-origin crude oil, petroleum products, and petrochemical products through August 21, 2026.

GL X represents a significant, albeit temporary, relaxation of U.S. sanctions applicable to Iran’s energy sector. It permits transactions that would otherwise be prohibited under multiple Iran-related sanctions programs, but it comes with conditions.

Scope of Authorization:

GL X authorizes all transactions that are ordinarily incident and necessary to the production, sale, delivery, or offloading of Iranian-origin crude oil, petrochemical products, and petroleum products.

Notably, the authorization extends to transactions involving vessels blocked pursuant to the covered sanctions authorities. In a note to GL X, OFAC states that authorized activities include supporting maritime and logistical services, including:

• vessel management and crewing;
• bunkering services;
• piloting services;
• vessel registration and flagging;
• insurance and classification services;
• salvage operations;
• emergency repairs; and
• environmental mitigation and protection activities.

The authorization also covers activities necessary to ensure the safety of vessels and crew carrying Iranian-origin energy products.

GL X is broader than an authorization OFAC had issued earlier in the conflict known as General License U (“GL U”), which was published on March 20 and expired a month later, on April 19, 2026. Whereas GL U was principally a wind-down authorization limited to cargoes that had already been loaded onto vessels as of March 20, GL X authorizes ongoing commercial transactions involving the production, sale, transportation, and delivery of Iranian-origin crude oil, petroleum products, and petrochemical products through August 21, 2026. Also, whereas GL U covered crude oil and petroleum products, GL X adds petrochemical products to the mix – an addition of particular importance to farmers affected by rising fertilizer prices.

U.S. Imports Authorized:

Transactions authorized by GL X include the importation into the United States of Iranian-origin crude oil, petroleum products, and petrochemical products, where such imports are ordinarily incident and necessary to authorized sales, deliveries, or offloading activities.

Payments to Iran Permitted:

GL X authorizes payments owed to Iran, the Government of Iran, or any blocked person for purchases of Iranian-origin crude oil, petroleum products, and petrochemical products to be made in U.S. dollar-denominated funds. This is another way in which GL X is broader than GL U.

This authorization may substantially facilitate commercial transactions that would otherwise encounter significant sanctions-related payment obstacles.

Key Limitations:

The GL X authorization is not unlimited. In particular, it does not authorize:

• transactions involving persons located in or organized under the laws of North Korea, Cuba, the Crimea region of Ukraine, or other covered regions of Ukraine identified in Executive Order 14065;
• transactions involving entities owned or controlled by, or operating in joint venture with, such persons; or
• transactions prohibited under sanctions authorities not specifically referenced in GL X.

These limitations are important guardrails. They make clear that the relaxation of sanctions is Iran specific and does not authorize, for example, transactions involving persons who have been designated as sanctions targets under other, non-Iran programs.

Key Takeaways:

• GL X represents a significant expansion of OFAC’s prior authorization under GL U, which was limited to certain cargoes already loaded onto vessels, functioned primarily as a wind-down authorization, and did not cover petrochemical products or expressly authorize dollar-denominated payments.
• Market participants seeking to rely on GL X should conduct appropriate diligence to confirm that proposed activities fall within the scope of the authorization and do not implicate excluded jurisdictions, counterparties, or sanctions authorities not covered by the license.
• Given GL X’s scheduled expiration on August 21, 2026, parties should plan accordingly and avoid activity that is permissible only because of GL X but risks continuing past GL X’s expiration date.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.