US issues first General License for Iran under Memorandum of Understanding, but impact remains uncertain

As detailed in our recent legal alert, the US and Iran released details regarding a joint ceasefire agreement, titled the “Islamabad Memorandum of Understanding between the United States of America and the Islamic Republic of Iran” (MOU).*

The MOU contemplates significant sanctions reform with respect to Iran, and has already resulted in temporary sanctions relief: the US Office of Foreign Assets Control (OFAC) issued General License X on June 22, 2026, which permits certain transactions for 60 days in a critical element of the Iranian energy sector.¹

Yet the MOU requires both parties to reach a final agreement, and the ceasefire remains fragile, as both sides have reportedly accused the other of violating the agreement within days of its signing.² Further, the UK and EU have not (as yet) indicated that they will amend their own autonomous sanctions against Iran. Although the sanctions relief contemplated by General License X and the MOU clearly carry the substantial potential for global markets (including the maritime, energy, and financial services sectors), their short- and long-term impact remain uncertain. 

Background 

The United States has maintained sanctions on Iran since the Iranian Revolution in 1979.³ Over the decades, the US drastically expanded its sanctions regime against Iran, in turn constraining the Iranian economy and limiting its access to the global financial system. Before this week, US sanctions against Iran prohibited nearly all US economic activity with Iran (with some exceptions, such as humanitarian aid and agricultural exports) and created significant legal risk for foreign persons engaging in the same.⁴

The Iranian Transactions and Sanctions Regulations (ITSR), for example, generally prohibit the direct or indirect exportation of goods, technology, or services from the US or by a US person to Iran or the government of Iran.⁵ The ITSR also generally prohibit US persons from brokering any commercial transactions with Iran.⁶ Among other authorities, the Iranian Financial Sanctions Regulations (IFSR) restrict Iran’s access to the financial system by authorizing sanctions and other penalties against US and foreign financial institutions that provide certain services to specified sectors of the Iranian economy and/or sanctioned persons.⁷

This regime also includes numerous authorities that specifically target Iran’s petroleum and petrochemical sectors.⁸ US law, for example, has authorized direct sanctions against Iran as well as secondary sanctions against foreign entities that transact in or support the Iranian energy sector. These authorities exposed owners, operators, insurers, and financiers of vessels transporting petrochemical products from Iran to sanctions, as well as the vessels themselves. Indeed, OFAC and the US Department of State have frequently leveraged these authorities against energy producers, shipping companies, traders, and financial institutions in wide-ranging efforts to restrict Iran’s access to proceeds from its petroleum and petrochemical resources.⁹ Yet this regime will significantly change if the MOU is fulfilled and a final deal is reached. 

US – Iran MOU & General License X

As read by a senior US government official, paragraph 7 of the MOU envisions the termination of “all types of” sanctions by the US against Iran as part of a final deal. Further, Paragraph 10 of the MOU requires the US Department of Treasury to immediately begin issuing waivers for the export of Iranian crude oil, petroleum products and derivatives, and all associated services (e.g., banking transactions, insurance, and transportation) while the final deal is negotiated. 

General License X (the License), is the first step towards fulfilling this obligation under the MOU. The License specifically authorizes “all transactions incident and necessary to the production, sale, delivery, or offloading of crude oil, petrochemical products, or petroleum productions of Iranian origin,” including transactions involving certain blocked vessels, through August 21, 2026.¹⁰ It also permits various maritime services in relation to the carriage of such products including ship management, bunkering, insurance and flagging, classification and salvage. Additionally, the License temporarily removes the prohibition against importing Iranian-origin crude oil, petrochemical, and petroleum products into the US, and  lifts the long-standing prohibition against using US dollars (USD) to make payments to the Government of Iran for the above-noted products. 

Impact on Sanctions & Sanctions Compliance 

Immediate Impact. The short-term impacts from the MOU and General License X could be significant, particularly with respect to the petroleum trading industry, and providers of marine services and insurance. The License has the potential to unlock significant revenue for companies operating in these industries. 

General License X, however, does not lift prohibitions imposed by any other Executive Order or OFAC regulations not specifically identified in the License. It also expressly prohibits transactions involving persons located in or organized under the laws of North Korea, Cuba, certain regions in Ukraine, or any entity owned, controlled by, or in a joint venture with such persons. 

Perhaps more significantly, Iran and the US reportedly continue to engage in hostilities in the Strait. These continued operations may, in practice, limit the willingness of the maritime industry (and its insurers) to engage in the activity permitted by the License.

Moreover, General License X does not alter sanctions imposed by the UK or the EU with respect to Iran. The UK maintains asset freeze restrictions against a number of key entities in the Iranian oil, gas, petrochemical, and shipping industries, including NIOC, NICO, NIGC, NITC, NIORDC, and Petropars. This will restrict businesses with a UK nexus from being involved in transactions with such parties notwithstanding any relief in the License. The EU for its part has not only imposed asset freeze restrictions against the same entities but also introduced prohibitions on the purchase, import or transportation of Iranian oil, gas and petrochemical products as well as the provision of financial assistance in relation to those activities, which would include (re)insurance. Thus, traders, shipowners, charterers, and (re)insurers with an EU nexus will be prohibited from involvement in such activities. 

Companies unconstrained by any EU or UK nexus will still need to factor in the short-term nature of the relief provided by the License. Voyages can take some weeks and run the risk of delays due to port congestion or other unforeseen events. Delays that cause discharge to take place beyond August 21 will be of concern to those relying on the License. Other long-tail liabilities, such as payments of demurrage, or claims arising out of damage to cargo or vessels, are also likely to extend well beyond the present August 21 deadline. 

Longer-Term Impacts. The longer-term implications of the MOU will depend heavily on the parties’ ability to reach a final agreement. As of this writing, the contours of that deal and the likelihood of it being reached remain in flux. US Vice President (VP) JD Vance recently stated that Iran will receive further sanctions relief only if the Iranians perform their obligations under the MOU.¹¹ The VP also stated that the US agreed to relieve sanctions on Iranian oil because the oil sanctions “were ineffective,” but other sanctions will remain in place until Iran demonstrates its commitment to the deal.¹² According to the VP, negotiators have built the “foundation” for a deal, but “haven’t built the house.”¹³

Additionally, the MOU’s contemplated removal of “all” US sanctions against Iran implicates the deconstruction of a complex legal framework which applied by various branches of the US government over an extended period of time. This framework includes statutes, executive orders, and regulations, each of which may need to be rescinded in different ways. 

Key Takeaways

Affected companies should consider monitoring updates from OFAC and the US government closely. Although the US and Iran have committed to negotiating and achieving a final deal under the MOU within 60 days, this negotiating period may be extended by mutual consent. The initial sanctions relief provided by General License X, although consequential for the energy sector, does not completely untangle the complex web of sanctions the US has imposed on Iran, or change the EU and UK’s own autonomous sanctions against Iran. Further, companies should consider that the geopolitical situation has been changing—and will likely continue to change—very quickly. As of this writing, a deal has not been reached, and the signed MOU still has not been formally published by the US Government. Companies entering this space should accordingly consider contingency planning and assess their ability to respond swiftly to developments. 

We will continue to monitor developments and expect to publish additional insights on this topic in the coming days. 

*Jeffery W. Cottle et al., Sanctions Impact: U.S. and Iran enter into MOU, Expressing Their Intentions to End Military Operations and Immediately Address Sanctions Issues, Clyde & Co (June 18, 2026), https://www.clydeco.com/en/insights/2026/06/sanctions-impact-u-s-and-iran-enter-into-mou-expre. 

¹U.S. Dep’t of the Treasury, Office of Foreign Assets Control, General License X: Authorizing the Production, Delivery and Sale of Crude Oil, Petrochemical Products, and Petroleum Products of Iranian-Origin Through August 21, 2026 (June 22, 2026), https://ofac.treasury.gov/media/936206/download?inline.  

²President Donald J. Trump (@realDonaldTrump), X, https://truthsocial.com/@realDonaldTrump/posts/116824603632739697 (last visited June 28, 2026); see also Tabby Wilson, US and Iran Exchange Strikes and Accuse Each Other of Violating Ceasefire, BBC.com (June 28, 2026), https://www.bbc.com/news/articles/cdxdwkgqgq0o.  

³Exec. Order No. 12170, 44 Fed. Reg. 65729 (Nov. 14, 1979). 

⁴See U.S. Dep’t of the Treasury, OFAC FAQ 163, https://ofac.treasury.gov/faqs/163 (Feb. 6, 2012) (stating that the ITSR “prohibit virtually all direct or indirect transactions involving Iran or the Government of Iran by U.S. persons or with a nexus to the United States, unless otherwise authorized by OFAC or exempted by statute”).

⁵See 31 C.F.R. § 560.204. 

⁶31 C.F.R. § 560.416. 

⁷31 C.F.R. §§ 561.201 et seq. 

⁸E.g., Iran Sanctions Act of 1996, Pub. L. No. 104-172; Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010, Pub. L. No. 111-195, 22 U.S.C. §§ 8501–8551;  Iran Threat Reduction and Syria Human Rights Act of 2012, Pub. L. No. 112-158, 22 U.S.C. §§ 8701-8795; Exec. Order No. 13224, as amended; Exec. Order No. 13866;  Exec. Order No. 13846; and Exec. Order No. 13902.

⁹See, e.g., U.S. Dep’t of State, Sanctioning Entities That Have Traded in Iran’s Petroleum (Nov. 20, 2025), https://www.state.gov/releases/office-of-the-spokesperson/2025/11/sanctioning-entities-that-have-traded-in-irans-petroleum-2/; U.S. Dep’t of the Treasury, Press Release, Economic Fury Targets Iranian LPG Smuggling and Shadow Banking Networks (June 5, 2026), https://home.treasury.gov/news/press-releases/sb0524; U.S. Dep’t of State, Sweeping Sanctions on Iran’s Energy Exports (Oct. 9, 2025), https://www.state.gov/releases/office-of-the-spokesperson/2025/10/sweeping-sanctions-on-irans-energy-exports/. 

¹⁰U.S. Dep’t of the Treasury, Office of Foreign Assets Control, General License X: Authorizing the Production, Delivery and Sale of Crude Oil, Petrochemical Products, and Petroleum Products of Iranian-Origin Through August 21, 2026 (June 22, 2026), https://ofac.treasury.gov/media/936206/download?inline.  

¹¹Vice President JD Vance Briefs Reporters on Iran Deal, C-SPAN (June 18, 2026), https://www.c-span.org/program/white-house-event/white-house-daily-briefing-with-vice-president-jd-vance/681347 (at 3:00).

¹²Id. at 24:00, 26:25.

¹³Vice President Vance Gives Update on U.S.-Iran Talks, C-SPAN (June 22, 2026), https://www.c-span.org/program/news-conference/vice-president-vance-gives-update-on-us-iran-talks/681487 (at 3:30).