UK significantly expands Iran sanctions regime: Implications for energy, shipping and insurance

The UK recently enacted legislation to strengthen its Iranian sanctions regime, introducing comprehensive new sectoral measures affecting software, aviation, finance, trade, energy, (re)insurance and shipping. In this article we explore new measures targeting the energy, shipping and (re)insurance sectors.

Why has the UK enacted new restrictions?

Last year the UK introduced changes to the UK Iranian sanctions regime, after triggering (along with France and Germany) the “snapback” mechanism within the 2015 Joint Plan of Action (“JCPoA”)¹ in response to Iran’s “persistent and significant non-compliance”.² This led to the re-imposition of UN sanctions on Iran in September, and in October the UK enacted legislation to implement the changes.³ The UN sanctions mainly list additional designated persons.

At the time, the UK did not follow the EU in imposing broader sectoral measures going beyond the UN’s snapback measures. The UK has now done so, and the recent changes largely mirror the EU’s existing regime, with the aim of restricting Iran’s access to funds, goods, services and technology that could support its nuclear activity.⁴

The Iran (Sanctions) (Amendment) Regulations 2026 (the “2026 Regulations”) were made on 7 September 2026, laid before Parliament on 8 September and came into force on 29 September 2026. They amend both the Iran (Sanctions) (Nuclear) (EU Exit) Regulations 2019 (the “Nuclear Regulations”) and the Iran (Sanctions) Regulations 2023 (the “2023 Regulations”).

What are the impacts on the energy, shipping and (re)insurance sectors?

Energy restrictions

There are extensive new restrictions targeting Iran’s energy sector. 
These include prohibitions on the export of specified energy-related goods to or for use in Iran, the supply or delivery of such goods from a third country to Iran, the making available or transfer of energy-related goods and technology to persons connected with Iran or for use in Iran, and the provision of related technical assistance, financial services (which includes (re)insurance)⁵, funds and brokering services.⁶ There is also a restriction on providing energy services such as drilling and well testing.⁷

The 2026 Regulations also prohibit the import or acquisition of Iranian oil and petroleum products and petrochemicals, as well as their supply or delivery from Iran to third countries, together with related technical assistance, financial services/ funds and brokering services.⁸ Similar restrictions apply to natural gas.⁹

Collectively, the measures restrict the provision of many goods and services to Iran’s energy industry, and dealings in Iranian energy.

Shipping restrictions 

The 2026 Regulations expand the Secretary of State’s powers to designate “specific ships” under the 2023 Regulations¹⁰ and add equivalent powers to the Nuclear Regulations.¹¹ Ships may now be designated under the Nuclear Regulations if suspected of involvement in relevant activity such as carrying restricted goods, dual-use goods, oil, gas and nuclear-related goods. Ships designated under the 2023 Regulations or Nuclear Regulations will appear on the UK Sanctions List.

The 2026 Regulations also broaden restrictions on services connected with specified ships, including brokering, chartering, crew services, financial services (including (re)insurance) or funds, operating and technical assistance.¹² Services relating to the acquisition, sale, transfer or supply of a specified ship are also prohibited, as is the procurement of services relating to one. The Regulations also introduce powers concerning port access, vessel movements and detention.¹³

In addition it is prohibited to make available vessels for transporting/storing oil or petroleum to a person connected with Iran or for the benefit of, or for use in, Iran.¹⁴ There are similar restrictions on providing technical assistance to tankers and cargo vessels.

The measures are therefore potentially relevant across the maritime sector – including for shipowners and operators, charterers, brokers, financiers, (re)insurers and other maritime service providers – and will require due diligence to ensure the restrictions on specified ships are complied with.

Insurance restrictions

The 2026 Regulations also have implications for the (re)insurance sector.

In particular, new Regulation 17C of the Nuclear Regulations prohibits the provision of (re)insurance services to a “person connected with Iran”, or a person acting on behalf of or at the direction of a person connected with Iran. A “person connected with Iran” is defined as:¹⁵

• an individual ordinarily resident in Iran or located in Iran, or a company incorporated or domiciled in Iran; or
• a company owned or controlled by an individual/ company described above.

The prohibition expressly encompasses services relating to the extension or renewal of (re)insurance arrangements, although policies incepting before 8 September 2026 may continue to be serviced. There are some other specific exceptions, including for compulsory or third-party insurance to an Iranian person in the UK or for diplomatic purposes.¹⁶

These changes increase the importance for (re)insurers of assessing Iranian connections at underwriting and renewal. It is of note that the definition of a “person connected with Iran” goes further than the definition of a “person connected with Russia” in the UK’s equivalent Russia sanctions regime, and will require due diligence into ownership and control by Iranian individuals/companies. Whilst existing policies can be serviced, insurers and reinsurers should consider whether any changes to existing insurance policies entered into before 8 September would trigger the new restrictions. Claims involving Iranian exposure should also be re-considered in light of the restrictions.

In addition, as mentioned above, many of the restrictions on energy and shipping have equivalent restrictions on the provision of (re)insurance, which will further impact due diligence requirements for insurers and reinsurers at both the underwriting and claims stages.

Are there any General Licences or exceptions?

The Office of Trade Sanctions Implementation (“OTSI”) has issued a General Trade Licence permitting certain activities that would otherwise be prohibited under the new energy-related restrictions, where those activities are necessary for the continued operation of the Shah Deniz gas project. Use is subject to applicable record-keeping requirements.

The 2026 Regulations also set out some limited exceptions to specific measures.

What does this mean for businesses?

The expanded regime increases the sanctions risks arising from any Iranian nexus, reinforcing the need to treat Iran as a high-risk jurisdiction. Businesses involved in energy, shipping, trade finance and related services (e.g. insurance and reinsurance) should apply enhanced scrutiny to Iran-related transactions, counterparties and services, including where there is any indication that a party may be owned or controlled by an Iranian person. Exporters of energy-related goods and technology should also be aware of the risks of circumvention; in particular, the risk of diversion of their goods from non-sanctioned third countries to Iran, and the need for due diligence end user identification and certification to combat circumvention.

These changes mean that compliance with UK-Iranian sanctions cannot be addressed solely through screening counterparties against sanctions lists, as the new measures include activity-based restrictions applying to dealings with persons connected with Iran and to particular sectors, goods and services, including broad restrictions on the provision of (re)insurance and extensive measures targeting Iran’s energy sector.

Whilst these Regulations apply to individuals/entities based in the UK, they also apply to UK Persons (including branches of UK companies) operating in third countries which may have heightened exposure to Iranian business, such as those in the Middle East. 

Given the breadth of the new regime, businesses with potential Iranian exposure should also assess whether existing contractual protections, sanctions clauses and compliance controls remain appropriate.

1. Under the JCPoA with the UK, France and Germany, Iran agreed to limit its Iranian nuclear programme in exchange for sanctions relief.
2. Explanatory Memorandum to the Iran (Sanctions) (Amendment) Regulations 2026, available here. 
3. Iran (Sanctions) (Nuclear) (EU Exit) (Amendment) Regulations 2025.
4. Explanatory Memorandum to the Iran (Sanctions) (Amendment) Regulations 2026, available here.
5. Although there is an exception where the provision of (re)insurance is not connected with the energy sector in Iran, see new Reg. 37C of the Nuclear Regulations.
6. New Chapter 1B of the Nuclear Regulations.
7. New Reg. 27O of the Nuclear Regulations.
8. New Chapter 2B of Nuclear Regulations.
9. New Chapter 2D of Nuclear Regulations.
10. New Chapter 4A.
11. New Reg. 36L of Nuclear Regulations.
12. New Reg. 43C(1) of 2023 Regulations.
13. New Part 5B of Nuclear Regulations.
14. New Reg. 33 of Nuclear Regulations.
15. Reg. 4 of Nuclear Regulations.
16. New Reg. 37ZB of Nuclear Regulations.