Trump Administration Temporarily Eases US Sanctions on Iranian Oil

UPDATE: On July 7, 2026, OFAC published Iran General License X1, which revokes GL X and authorizes transactions ordinarily incident and necessary to the wind down of transactions previously authorized by GL X until July 17, 2026. 

Key Takeaways

• General License X (GL X) is a notable, albeit time-limited, easing of Iran sanctions that could be extended, terminated, or expanded, depending on how US-Iran negotiations progress.
• Risks remain, however, because (i) GL X authorizes only transactions with Iranian persons designated under certain OFAC sanctions programs (as well as non-sanctioned Iranian persons). In addition, (ii) US authorities have not said whether GL X is intended to insulate US persons from criminal liability under 18 U.S.C. § 2339B or civil liability under the Anti-Terrorism Act (ATA) if their conduct could also be said to provide material support to Foreign Terrorist Organizations (FTOs). Further, (iii) GL X does not eliminate exposure for transactions that would otherwise be prohibited under EU, UK or other countries’ sanctions programs.
• GL X authorizes US dollar payments to Iran, including to the Government of Iran, but it remains to be seen whether global financial institutions will be wary of processing even ostensibly authorized payments.
• Companies intending to rely on GL X to conduct transactions involving Iranian-origin petroleum products would be well advised to (i) approach these activities mindful of GL X’s limited duration and scope, as well as the possibility of snapback; (ii) actively manage residual risks, including by conducting robust due diligence on parties involved in these transactions; and (iii) review their contractual representations and warranties with key business partners to confirm that they are not contractually restricted from entering into transactions involving Iran or Iranian crude oil, petroleum or petrochemical products.

Background

On June 22, 2026, the US Treasury Department’s Office of Foreign Assets Control (OFAC) issued General License X (GL X).  GL X authorizes US persons through August 21, 2026, to engage in certain transactions involving the production, delivery, offloading, and sale of crude oil, petroleum, and petrochemical products of Iranian-origin—including their importation into the United States and, significantly, payment in US dollars. 

GL X follows President Trump’s signing of a Memorandum of Understanding between the United States and Iran on June 17, 2026, to end the Iran war (the MoU). It reflects a shift, at least for now, from the United States’ “maximum pressure” campaign against Iran, originally launched in 2018 when the US withdrew from the Joint Comprehensive Plan of Action (JCPOA) and revived when President Trump took office again in 2025.  Unless renewed or extended, GL X is set to expire on August 21, 2026.

GL X follows actions the Administration took as recently as May 11, 2026, when OFAC designated 12 individuals and entities for their alleged role in enabling the Islamic Revolutionary Guard Corps’ (IRGC) sale and shipment of Iranian oil to China.  In its announcement of the designations, OFAC stated that the Trump Administration was increasing pressure on oil-related transactions to target Iran’s primary revenue stream.  GL X is a sharp contrast to recent US sanctions policy on Iranian oil sales.

GL X’s Scope

GL X broadly authorizes all transactions “ordinarily incident and necessary” to the production, sale, delivery or offloading of oil, petroleum, and petrochemical products of Iranian origin, including transactions involving blocked vessels.  The examples provided in GL X of authorized transactions indicate a broad understanding of “ordinarily incident and necessary.”  They include, for example, the safe docking and anchoring of vessels, preservation of vessel crew safety, emergency repairs or environmental mitigation, and services like vessel management, crewing, bunkering, piloting, registration, flagging, insurance, classification, and salvage.

Notably, GL X authorizes payments to the Government of Iran, as well as to other persons blocked pursuant to the sanctions programs specified by GL X, which include the Iranian Transaction and Sanctions Regulations (ITSR), Global Terrorism Sanctions Regulations (GTSR), Russian Harmful Foreign Activities Sanctions Regulations (RuHSR), and other programs. [1] Even more significantly, GL X authorizes US dollar payments in connection with oil and petroleum products, which appears to contemplate that US financial institutions might process these payments, and sanctioned Iranian banks—including the Central Bank of Iran—could receive US dollars. 

While GL X also authorizes the import of Iranian-origin oil and petrochemical products into the United States, it does not authorize transactions involving persons located in or organized under the laws of North Korea, Cuba, or the Crimea or so-called Donetsk or Luhansk People’s Republic regions of Ukraine. 

GL X’s Significance and Potential Impact 

The Trump Administration’s recent actions indicate that a significant thawing in US-Iran relations may be unfolding, beginning with this temporary but material easing of US sanctions targeting Iran.  GL X comes a few days after the United States and Iran signed the MoU which, among other things, commits the United States to undertake “to terminate all types of sanctions” on Iran, including unilateral US primary and secondary sanctions as well as multilateral sanctions introduced via United Nations Security Council and International Atomic Energy Agency (IAEA) resolutions.   

GL X is not the first form of sanctions relief for Iran that has been introduced by the Trump Administration in recent months. In March 2026, OFAC issued General License U (GL U), which temporarily authorized the delivery and sale of oil and petroleum products of Iranian origin that were loaded on vessels as of March 20, 2026.  (However, GL U was narrower in scope and did not authorize, for example, US dollar payments.)  OFAC also recently released Russia General Licenses 133 and 134, which both temporarily authorized the delivery and sale of Russian-origin oil and petroleum products.  Like GL X, these earlier general licenses were time-limited. They also appeared to be intended to ease the strain on oil and petroleum markets stemming from the US-Iran conflict, which GL X could be said to do as well.  

On its face, GL X provides broad authorization for the sale, delivery, and offloading of Iranian-origin oil, petroleum, and petrochemical products. Nonetheless, companies and individuals relying on GL X would be well advised to proceed with caution.  US sanctions continue to broadly prohibit US persons from engaging in transactions unrelated to Iranian-origin oil, petroleum, and petrochemical products. Further, the United States maintains extensive controls on the export of US-origin goods to Iran as well as exports involving US persons, including of services. 

In addition, it is not clear what exposure US (or non-US) actors may face if a beneficiary of a contemplated GL X transaction is a designated FTO, such as the IRGC, or if the transaction involves an entity that the US Government has previously identified as a front company for the IRGC.  US authorities have not said, for example, whether GL X is intended to authorize activities that may otherwise fall within the ambit of 18 U.S.C. § 2339B (which criminalizes providing material support to an FTO).[2] This begs the question of whether this or a future Administration or the plaintiffs’ bar may one day take the position that transactions that appear to be authorized by GL X run afoul of other US laws—criminal laws like Section 2339B but also laws like the ATA, which creates a private right of action against those who aid and abet acts of international terrorism. 

With respect to secondary sanctions risk, any transactions that would fall within the scope of the general license should not create secondary sanctions exposure for non-US persons, since non-US persons do not generally risk exposure to US blocking sanctions for engaging in activities that are authorized for US persons.  Non-US persons would still be well advised, like US persons, to consider the full panoply of other risks, including any applicable EU, UK, or other sanctions regimes that may prohibit their transactions.

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