U.S. Authorizes Sale Of Iranian Oil For 60 Days

Highlights

• The United States has authorized the production, delivery and sale of Iranian oil, petrochemical products and petroleum products through August 21, 2026.
• The U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) published General License (GL) X on June 22, 2026, after negotiators spent much of the weekend seeking to preserve a fragile agreement to end the war in Iran. Qatari and Pakistani mediators indicated that the U.S. and Iran had agreed on a road map to reach a longer-term agreement in 60 days. OFAC's GL X will allow the sale of Iranian oil for the duration of those talks.
• This is the second time that the U.S. has authorized the temporary sale of Iranian oil since the outbreak of the conflict with Iran. GL X goes further than the previous authorization in numerous respects, including by authorizing the production of Iranian oil, petrochemical and petroleum products and specifying that buyers may pay Iran directly in U.S. dollars.

The U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) on June 22, 2026, issued a broad general license (GL) authorizing the production, delivery and sale of Iranian oil, petrochemical products and petroleum products for a 60-day period through August 21, 2026. GL X was published early in the morning as negotiators in Switzerland sought to preserve a fragile U.S.-Iran interim peace agreement reached last week and described in a previous Holland & Knight alert. Qatari and Pakistani mediators indicated that the U.S. and Iran had agreed on a road map to reach a longer-term agreement in 60 days, and GL X will allow the sale of Iranian oil for the duration of those talks.

This is the third time that the U.S. has authorized the temporary sale of Iranian or Russian sanctioned oil since the outbreak of the war with Iran and the resulting closure of the Strait of Hormuz, a key chokepoint for the global energy trade. On March 20, 2026, OFAC issued GL U to authorize the delivery and sale of Iranian crude oil and petroleum products loaded onto vessels as of that date for a 30-day period, and a separate GL authorized the temporary delivery and sale of Russian crude oil and petroleum products for a 30-day period ending on April 11, 2026. Although many U.S. institutions refrained from engaging in transactions pursuant to these temporary licenses, the authorizations provided a respite from secondary sanctions risks for non-U.S. actors dependent on such oil.

Authorizations and Limitations

• For the short period from June 22, 2026, through August 21, 2026, GL X authorizes transactions ordinarily incident to the production, sale, delivery or offloading of Iranian crude oil, petrochemical products or petroleum products that would otherwise be prohibited by numerous U.S. sanctions programs, including those designed to counter terrorism and the proliferation of weapons of mass destruction, as well as those imposed on Iran and Russia.
• Authorized transactions include the production, sale, delivery or offloading of such crude oil, petrochemical products or petroleum products, including transactions for the safe docking and anchoring of vessels carrying such crude oil, petrochemical products or petroleum products; the preservation of the health or safety of the crew of any such vessel; emergency repairs or environmental mitigation or protection activities relating to any such vessel or to such crude oil, petrochemical products or petroleum products held in storage; and services such as vessel management, crewing, bunkering, piloting, registration, flagging, insurance, classification and salvage. The authorization extends to Iranian-origin crude oil, petrochemical products and petroleum products produced by some sanctioned entities.
• GL X is broader than the previously issued GL U, which covered crude oil or petroleum products but not petrochemical products, and which authorized all transactions ordinarily incident and necessary to the "sale, delivery, or offloading" of oil and petroleum products but not "production" of the same.
• GL X indicates that any payment of funds owed to Iran, the Government of Iran or any blocked person for the authorized purchase of Iranian crude oil, petrochemical products or petroleum products may be made in U.S. dollars. Critically, there is no requirement that buyers pay into a blocked or escrow account – an arrangement sometimes used to allow sanctioned countries to sell petroleum products while limiting their ability to access the resulting revenues.
• There are some limitations on GL X's broad scope: 1) It does not authorize transactions prohibited by the Foreign Terrorist Organizations (FTO) sanctions, including transactions with designated FTOs such as the Islamic Revolutionary Guard Corps (IRGC), and 2) it does not authorize transactions involving persons in sanctioned jurisdictions such as North Korea, Cuba and the Russia-occupied regions of Ukraine.

Key Takeaways

• It remains to be seen whether U.S. financial institutions and insurers will rely on the GL given the elevated risks and short-term duration of the authorization. Although many U.S. banks remain unwilling to process transactions pursuant to such temporary authorizations, the GL relieves secondary sanctions pressure on non-U.S. companies. OFAC has stated repeatedly that non-U.S. persons will not be subject to secondary sanctions risks for engaging in a transaction that a U.S. person would be authorized to undertake pursuant to a GL. This is particularly important for China, which imports the vast majority of Iran's oil exports. Chinese entities – which were excluded from OFAC GLs authorizing activities in Venezuela – may avail themselves of GL X.
• Although GL X authorizes transactions otherwise prohibited by a long list of U.S. sanctions programs, the risks of dealing with a designated FTOs such as IRGC remain. The IRGC is heavily involved in Iran's oil and gas trade and has been linked by OFAC to the Iranian government's newly created Persian Gulf Strait Authority (PGSA), which has reportedly sought to mandate that all vessels transiting the Strait of Hormuz obtain insurance from the PGSA. OFAC sanctioned the PGSA under its counterterrorism authorities on May 26, 2026. Beyond the sanctions compliance risks, dealings with the IRGC and IRGC-linked entities could raise risks of other liabilities, including civil and criminal liability under other counterterrorism statutes. Federal law makes it a crime to knowingly provide "material support" to a designated FTO and likewise authorizes civil lawsuits from private litigants injured by such support (including treble damages). GL X would not mitigate the risks arising under these laws.
• The practical difficulties of paying Iran in U.S. dollars are significant. The GL does not authorize the unblocking of any property, meaning that U.S. persons would not necessarily be authorized to send payments to Iranian actors once such funds have been deposited in a U.S. account.
• Critically, a Memorandum of Understanding (MoU) reached between the U.S. and Iran last week called for more robust sanctions relief, including a U.S. commitment to end "all types of sanctions" currently facing Iran, including sanctions compelled by the United Nations Security Council. That agreement appeared fragile this weekend after renewed clashes between Israel and Hizbollah, and Iran appeared to close the Strait of Hormuz. The early-morning publication of GL X indicated that the fraught weekend negotiations had managed to keep the parties at the table.

Although GL X provides another temporary opportunity for Iran to reengage in the oil and gas markets, the risks will persist as long as the architecture of U.S. sanctions remain in place and a final, permanent peace deal is still elusive. Many U.S. sanctions on Iran are mandated by statute, and the U.S. administration will be required to engage with Congress to secure a longer-term waiver – or removal – of sanctions.