Navigating The Strait Of Hormuz: U.S. Sanctions And Global Oil Markets

On February 28, 2026, the United States launched Operation Epic Fury, which has significantly reshaped the geopolitical landscape. This ongoing operation has made the status of shipping through the Strait of Hormuz a key point of leverage for Iran. As of April 19, 2026, Iran has pledged to restrict ships passing through the Strait.

The Strait of Hormuz is a narrow waterway that connects the Persian Gulf to the Gulf of Oman and, ultimately, the Arabian Sea. In 2024, approximately 20 billion barrels of oil – both crude oil and petroleum products – passed through this vital passage daily, accounting for roughly 27% of global maritime oil trade and 20% of the world’s petroleum liquids consumption that year.¹ The uncertainty and potential closure of the Strait have caused oil and gas prices worldwide to soar. Countries in Asia, some of which have limited oil reserves, have been hit particularly hard – before the war, around 80% of the oil that passed through the Strait was destined for Asia.² 

While the Trump administration pursues negotiations with Iran, it has also relaxed certain sanctions aimed at ensuring global oil supplies continue despite the Strait’s effective, ongoing closure. Specifically, the administration, via the Department of Treasury, Office of Foreign Assets Control (OFAC), has issued and extended General Licenses, which have provided time-limited sanctions exemptions designed to allow for the delivery of and certain transactions related to Russian and Iranian crude oil and petroleum.

On March 12, 2026, OFAC issued General License 134 titled Authorizing the Delivery and Sale of Crude Oil and Petroleum Products of Russian Federation Origin Loaded on Vessels as of March 12, 2026. General License 134 authorized certain otherwise prohibited transactions “that are ordinarily incident and necessary to the sale, delivery, or offloading of crude oil or petroleum products of Russian Federation origin loaded on any vessel, including vessels blocked” on or before 12:01 a.m. eastern daylight time on March 12, 2026 and through April 11, 2026 at 12:01 eastern daylight time.

Paragraph (a) of General License 134 indicated that, while the license was in effect, it impacted a variety of Executive Orders and sanctions regulations.³ OFAC emphasized that crude oil and petroleum products produced by entities sanctioned under 31 C.F.R. § 587 (Russian Harmful Foreign Activities Sanctions Regulations) and 31 C.F.R. § 589 (Ukraine-/Russia-Related Sanctions Regulations) fall within the General License. Under General License 134, a number of services that are ordinarily incident and necessary to the delivery of such crude oil or petroleum products were specifically enumerated and authorized, including, for example, offloading crude oil or petroleum products, transactions for the sale of these products, as well as docking and anchoring of vessels carrying the same.

Subsequently, on March 19, 2026, General License No. 134 was replaced and superseded in its entirety by General License No. 134A, which contained identical provisions to General License 134 with certain added restrictions to its operation. Specifically, both General License No. 341 and No. 341A contained restrictions that prohibited “[a]ny other transactions or activities prohibited by any other Executive order or by any part of 31 CFR chapter V not referenced in this general license, including any transaction or activity involving Iran, the Government of Iran, or Iranian-origin goods or services that is prohibited by the Iranian Transactions and Sanctions Regulations (31 CFR part 560), except as authorized” by paragraph (a) to the General License. 

General License No. 341A also prohibited “[a]ny transaction involving a person located in or organized under the laws of the Islamic Republic of Iran, the Democratic People’s Republic of Korea, the Republic of Cuba, the Covered Regions of the Ukraine, as defined by E.O. 14065, the Crimea Region of Ukraine, as defined by E.O. 13865, or any entity that is owned or controlled by or in a joint venture with such persons.”

After General License 341A expired, the Trump administration, through Secretary of Treasury Scott Bessent, initially indicated that the United States would not extend the Russia-related sanctions exceptions contained therein. However, a few days after that announcement, OFAC released General License 134B, which does exactly that.

General License 134B, permits “all transactions … that are ordinarily incident and necessary to the sale, delivery or offloading of crude oil or petroleum products of Russian Federation origin loaded on any vessel, including vessels blocked under the above-listed authorities, on or before 12:01 a.m. eastern daylight time, April 17, 2026 . . . through 12:01 a.m. eastern daylight time, May 16, 2026.”⁴ The substantive terms of General License 134B are otherwise identical to the terms of General License 341A described above.

While the administration has shown a willingness to temporarily ease U.S. sanctions on Russia to address the disruptions in the oil and petroleum markets caused in part by the Strait of Hormuz dispute, it has not extended similar exemptions for Iranian-origin oil, which expired on April 19, 2026.

The Trump administration has been strategically balancing sanctions and temporary exemptions to address changes in the global oil market caused by the war in Iran. These policies are likely to continue to evolve in the coming weeks. 

Footnotes

1. Congressional Research Service, Iran Conflict and the Strait of Hormuz: Impacts on Oil, Gas, and Other Commodities 4 (March 11, 2026).

2. Sui-Lee Wee, Javier C. Hernández, Choe Sang-Hun, and Alex Travelli, Iran War Focuses America’s Friends in Asia to Court its Rivals, The New York Times (April 17, 2026).

3. The sanctions regulations and Executive Orders indicated as impacted are as follows: Russian Harmful Foreign Activities Sanctions Regulations, 31 CFR part 587; Ukraine-/Russia-Related Sanctions Regulations, 31 CFR part 589; Iranian Transactions and Sanctions Regulations, 31 CFR part 560; Weapons of Mass Destruction Proliferators Sanctions Regulations, 31 CFR part 544; Iranian Financial Sanctions Regulations, 31 CFR part 561; Iranian Sector and Human Rights Abuses Sanctions Regulations, 31 CFR part 562; Global Terrorism Sanctions Regulations, 31 CFR part 594; Executive Order 13876 of July 24, 2019 (“Imposing Sanctions with Respect to Iran”); Executive Order 13902 of January 10, 2020 (“Imposing Sanctions with Respect to Additional Sectors of Iran”); Executive Order 13949 of September 21, 2020 (“Blocking Property of Certain Persons with Respect to the Conventional Arms Activities of Iran”).

4. The sanctions authorities listed in General License 134B are generally the same as those listed in General License 134A but also include an additional reference to Executive Order 13846 of August 6, 2018 (“Reimposing Certain Sanctions with Respect to Iran”).

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