In conjunction with the recently entered and now apparently obsolete U.S.-Iran Memorandum of Understanding (the MOU), the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued and then revoked Iran-related sanctions relief. First, on June 21, 2026, Treasury issued General License (GL) X, and just a few weeks later, on July 7, it issued GL X1, which revoked GL X. This comes about a decade after the Treasury and State Departments had provided limited sanctions relief under the Iran Nuclear Deal (JCPOA), which was revoked a few years after it went into effect when President Donald Trump withdrew the United States from the JCPOA during his first administration. This article explains the impacts and limits of GL X and GL X1 in the context of the Iran war and intermittent negotiations.
The upshot of the recent Iran GL is that it appeared the Trump administration wanted to spur negotiations by providing immediate, concrete sanctions relief removing key barriers to transactions involving Iran’s oil sector. In practice, however, the lack of a carve-out for IRGC-related transactions and lack of public State Department waivers made it difficult to use. What’s more, as borne out by the quick change in policy, industry was rightfully wary of relying on such quick relief.
If, as the sides appear to still contemplate, negotiations can resume and a ceasefire can eventually hold, these basic elements of the bargain – incremental sanctions relief by the United States in exchange for security and nuclear commitments from Iran – will play an important part of any negotiated resolution.
1. What is a General License?
OFAC issues general licenses (GLs) “to authorize certain transactions that would otherwise be prohibited pursuant to a particular sanctions program.” These licenses, which OFAC issues under delegated International Emergency Economic Powers Act (IEEPA) authority, are self-executing, meaning that anyone who meets the criteria of the license can rely on it to carry out a licensed transaction that would otherwise be prohibited under U.S. sanctions. General licenses are publicly available on OFAC’s website and are published (eventually) in the Code of Federal Regulations.
Relying on a GL does not require any specific notification to OFAC or the U.S. government unless a notification requirement is specified in the license. For example, many of the recent Venezuela-related general licenses include requirements to report activities under the license to the Departments of State and Energy.
A GL specifies the sanctions program(s) under which it is issued, the activities it authorizes, limitations on the scope of the authorization, and the duration of time it is in effect. While some GLs are not time limited, others specify a number of days or a specific end date. Regardless of duration, OFAC can revoke a GL at any time with no requirement to provide advanced notice.
In general, a broadly scoped GL – covering a wider swath of otherwise prohibited activity – that is valid for a longer time period (or not strictly time bound) will be more likely to incentivize companies to start engaging in the transactions that rely on the GL. Accompanying such a GL with concrete diplomatic progress and industry engagement to affirmatively encourage authorized activities, as the U.S. government has done recently with respect to Venezuela, can also help to promote GL reliance despite continuing political uncertainty. In contrast, a GL that is limited in scope, includes multiple conditions, and lasts for only a short period of time will be less likely to provide actionable sanctions relief, especially if there is lack of apparent political will to support it and a track record of flip-flopping on the relief.
2. Why did OFAC issue GL X?
The Iran-U.S. MOU included a commitment that:
“immediately upon the signing of this MoU, and until the termination of sanctions, the U.S. Department of Treasury [sic] will issue waivers for the export of Iranian crude oil, petroleum products and derivatives, and all associated services including banking transactions, insurances, transportation, etc.”
General License X effectuated this commitment.
The MOU also contained two other sanctions-related provisions: (a) a commitment that the United States would not issue new sanctions pending a final deal; and (b) an undertaking to terminate all sanctions against Iran in a future agreed-upon schedule as part of a final deal. GL X does not implicate these separate sanctions-related commitments, the latter of which requires congressional action to fully effectuate.
3. What did GL X do?
General License X was broad, like the commitment in the MOU it was intended to effectuate. It authorized all transactions “ordinarily incident and necessary to the production, sale, delivery, or offloading of crude oil, petrochemical products, or petroleum products of Iranian origin.” Since Iran relies on a shadow fleet of sanctioned vessels to transport its oil and petroleum products, the authorization extended to vessels blocked under a range of sanctions programs, including Russia, terrorism, and weapons of mass destruction-related sanctions, in addition to Iran sanctions.
Authorized activities extended to vessel docking, registration, flagging, and insurance, which are all necessary as a practical matter to transport oil. Of note, the license also allowed the import into the United States of Iranian crude oil, petrochemical, and petroleum products as well as the payment for such products in U.S. dollars.
GL X was due to expire at 12:01 am EDT on August 21, but presumably would have been extended if negotiations had continued.
4. What didn’t GL X do?
While GL X authorized activity that would have been prohibited under a number of sanctions programs, it did not include authorization with respect to the Foreign Terrorist Organization (FTO) sanctions program or provide any exception from risk of civil suit or prosecution under the Material Support Statute for providing material support or resources to an FTO. As such, the license did not authorize transactions involving the Islamic Revolutionary Guard Corps or other designated FTOs. This FTO-related prohibition presumably extends to the Persian Gulf Strait Authority (PGSA), which OFAC sanctioned in May, cautioning that “Anyone cooperating with the so-called strait authority may be providing support to and receiving services from the IRGC…” Practically, this made it difficult to take advantage of the GL X authorization given the PGSA’s role regulating shipments through the Strait of Hormuz and the significant role the IRGC plays in the Iranian oil sector. For example, OFAC has designated the National Iranian Oil Company, which is involved throughout Iran’s oil sector, as an agent or affiliate of the IRGC.
Nor did GL X remove risks of sanctions designation for non-U.S. entities or individuals engaging with the Iranian energy, petroleum, petrochemical sector, and other similar activities, that are based in statute, rather than OFAC regulation. These statutes, which include mandatory sanctions designation authorities, include the Stop Harboring Iranian Petroleum Act, Iran Freedom and Counter-Proliferation Act of 2012, and the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010. They contain waiver authorities, which have been delegated to the Secretary of State, but there is no indication that State exercised those authorities in conjunction with OFAC GL X.
And, of course, the GL did not impact sanctions imposed on Iran by other jurisdictions, such as the United Kingdom and the European Union, which impose their own restrictions impacting Iran’s oil sector and shadow fleet vessels. In the absence of multilateral coordination – as with the JCPOA or previous Russia oil price cap coordination –global companies must continue to navigate a web of complicated Iran sanctions prohibitions, even with U.S. sanctions relief.
5. Why did OFAC issue GL X1, and what did it do?
The MOU-based rapprochement with Iran was short-lived. On July 7, after Iran struck ships in the Strait of Hormuz and the United States responded with air strikes, OFAC issued GL X1, which revoked GL X. Absent authorization, U.S. persons are generally prohibited from engaging in any transactions involving Iran, sanctioned vessels, or Iranian-origin products, even to terminate existing relationships. For this reason, GL X1 included a limited wind down authorization, which allowed for the termination of transactions previously authorized by GL X, through 12:01 am EDT on July 17. The license required any payment to a sanctioned person as part of the wind down to be made into a blocked account located in the United States, and it did not allow for any new transactions, such as purchases or loading of Iranian-origin products.
As a practical matter, ten days is a very short window to wind down complicated commercial transactions, especially when the transaction parties expected to have at least a 60-day window to complete them. Additionally, when funds are placed in a blocked account, the counterparty does not receive their expected payment, which can lead to legal challenge for breach of contract, especially outside of U.S. jurisdiction.
6. What can we expect going forward?
The rapid, yet incomplete, sanctions relief provided via GL X and then removed via GL X1 serves to underscore the risks and uncertainty associated with relying in any meaningful way on efforts to alleviate Iran sanctions during such a politically uncertain time. The current Iran “Economic Fury” sanctions blitz exemplifies these risks. Since the revocation of GL X, OFAC has issued three rounds of sanctions designations (on July 10, July 14, and July 15) targeting Iran and its supporters, including designations of vessels and companies engaging in the very activities previously authorized under GL X.
In practice, therefore, GLs X and X1 provide a cautionary tale to companies seeking to operate in previously sanctioned environments – especially when those environments relate to Iran. It is imperative to understand what the authorization covers, what it doesn’t, to assess the broader geopolitical risk environment, and to build in appropriate transactional and contractual protections.
In sum, purported sanctions relief issued in times of uncertainty, when the underlying issues that gave rise to the sanctions remain, can create significant sanctions-based hurdles and headaches down the road for those who do not fully consider the context of their business decisions.
If the current escalation between the United States and Iran can be reversed, and serious negotiations resume, the U.S. government will need to be prepared to re-issue a version of GL X, although companies will be rightfully gun-shy of relying on it. Accompanying multilateral engagement, statutory sanctions waivers, explicit policies of non-prosecution for those who engage with the IRGC, and promises of a longer wind-down period if revoked, would help address some of the barriers companies faced to relying on the original GL X. As a practical matter, however, a future Iran oil GL will not be viable unless it is accompanied by meaningful behavioral change by Iran and associated diplomatic progress among Iran, the United States and international partners.
