On June 17, 2026, US President Donald Trump and Iranian President Masoud Pezeshkian signed the Islamabad Memorandum of Understanding (MOU), which contemplates certain immediate sanctions relief for a reopening of the Strait of Hormuz. The MOU also opened a 60-day window to negotiate a broader agreement concerning Iran’s nuclear program. Following the MOU, the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued General License X to authorize certain energy-related transactions for 60 days. The general license appears to relate to a US commitment in Paragraph 10 of the MOU to “issue waivers” for the export of Iranian-origin crude oil, petroleum products and derivatives, and associated services.

Overview of MOU Economic Provisions

General License X: Authorizing Production, Delivery and Sale of Iranian Energy Products Through August 21, 2026

There continues to be a lack of clarity on the status of vessel traffic in the Strait of Hormuz, which since the MOU signing has been reopened, closed and reopened again. Nevertheless, OFAC issued General License (GL) X on June 22 to authorize otherwise prohibited transactions under a litany of sanctions authorities that are ordinarily incident and necessary to the production, sale, delivery or offloading of crude oil, petrochemical products and petroleum products of Iranian origin through 12:01 a.m. Eastern Daylight Time, August 21, 2026. Notably, the GL provides some relief with respect to Iranian petrochemical products even though the MOU was silent regarding these specific products. GL X further identifies a list of “[t]ransactions that are ordinarily incident and necessary” to include those related to safe docking and anchoring of vessels, health- and safety-related transactions, emergency repairs or environmental mitigation, and services such as vessel management, crewing, bunkering, piloting, registration, flagging, insurance, classification and salvage.

GL X clarifies that the importation into the United States of Iranian crude oil, petrochemical products and petroleum products is within the scope of the authorization where such importation is ordinarily incident and necessary to otherwise authorized sale, delivery or offloading activity. The GL also states that any payment of funds owed to Iran, the government of Iran or any blocked person for the purchase of crude oil, petrochemical products or petroleum products authorized by the GL may be made in US dollar-denominated funds.

GL X represents a significant change in U.S. sanctions applicable to Iran, at least temporarily. Until now, not only have U.S. persons generally been prohibited for decades from engaging in the activities the GL authorizes, but U.S. policy has been to frustrate Iran’s energy trade and deny it access to energy revenues. This has included, especially, U.S. dollar-denominated revenues. GL X authorizes U.S. persons not only to engage in certain otherwise prohibited activities related to the Iranian energy trade but also to make payments related to those activities to Iran and to sanctioned persons without significant conditions or limitations. 

Risk Watch

There are key risks that companies should bear in mind when considering engaging in activity authorized by GL X. 

• Tension With Existing OFAC Guidance and A Lack of Definitions for Key Terms: The GL may be in tension with existing OFAC guidance. As one example, existing OFAC guidance—most notably the May 1, 2026 OFAC Alert on the risks of Iranian demands for Strait of Hormuz passage—warns of the sanctions risks to US and non-US persons arising from demands for “toll” payments to Iran. Although elements of that guidance appear to have been overtaken by the authorizations in GL X, other important elements (such as the fact that the Islamic Revolutionary Guard Corps (IRGC) is a designated Foreign Terrorist Organization (FTO) and the fact that secondary sanctions may apply to certain conduct by non-US persons) remain unaddressed. OFAC has not yet rescinded or amended that guidance. Further OFAC guidance will likely be forthcoming, but until then, questions remain about how US and non-US companies alike might confidently operationalize the GL’s authorizations. 
  Furthermore, the GL does not define key terms, some of which are defined in some—but not all—of the several relevant sanctions regulations, which introduces some ambiguity. For example, key terms such as “petroleum products” and “petrochemical products” are not defined in each of the regulations containing prohibitions against which GL X provides authorization. Additionally, “ordinarily incident and necessary” is an OFAC term of art that implies that there are some unspecified activities that would also be covered; however, this standard can be challenging to apply in practice. 
• Executive Branch Discretion: There are no statutory or regulatory requirements for GL X to remain in effect until August 21, 2026. OFAC could revoke or amend the authorization and need not renew it, based on the President’s discretionary authority. Relevant recent history teaches that lesson. Although the MOU is significantly different than the commitments agreed to in the 2015 Iran nuclear agreement (known as the Joint Comprehensive Plan of Action, or JCPOA), the United States did previously issue a GL to satisfy its JCPOA commitments, which may serve as a cautionary tale. In 2016, OFAC issued GL H to enable foreign-incorporated entities that are owned or controlled by US persons to take advantage of the sanctions waivers designed to enable business with Iran by non-US companies. GL H proved to be incredibly complex and challenging to implement. It was ultimately revoked by OFAC with a short wind-down period after the United States withdrew from the JCPOA and OFAC imposed additional sanctions. Companies should therefore draw on the lessons from the JCPOA and carefully consider contingency plans for a comparable revocation of or amendment to GL X, if they choose to rely on it.
• Time Limited Authorization: Even if the GL remains in place until the expiration date of August 21, 2026, the 60-day allowance for companies to engage in temporarily authorized activity, from the GL’s issuance to expiration, may not be adequate for companies to negotiate and execute transactions, particularly if they are new to this historically high-risk market. For example, it may require significant time and expense to identify counterparties that do not themselves present sanctions or non-sanctions risk. Further, even if product can ship within the authorized time period, there may be post-GL activity such as completion of payment and resolution of contractual disputes, that would be frustrated by the absence of a lasting authorization. 
• Potential Civil and Criminal Liability: Iran remains a state sponsor of terrorism, and the IRGC, Iran’s hard-line branch of the Iranian Armed Forces, is still designated as an FTO. Companies considering doing any business involving Iranian energy products should be mindful of the FTO designation in particular. As we addressed in a recent alert in the context of the US designation of Mexican cartels as FTOs, such designations present litigation risks under the Anti-Terrorism Act insofar as victims of terrorist acts of an FTO or its affiliates or agents may sue any company that aids and abets or conspires with an FTO in support of such acts. Irrespective of current US government policy, the risk of such litigation from private litigants is exacerbated by very recent US government assertions that profits from the sale of Iranian petroleum products “support the IRGC’s full range of malign activities,” including not only terrorism but also the proliferation of weapons of mass destruction and international human rights abuses. Companies evaluating the risks of relying on GL X should also consider their potential exposure under the criminal Material Support statute (18 U.S.C. § 2339A/B) as well, which criminalizes the provision of “material support or resources” to a designated FTO. 

Strategic Risk: Even if companies rely on GL X and adhere to all legal requirements in engaging with Iran, there may still be a strategic risk or risk of exposure to investigation, including by Congress, simply by doing business with Iran, or with parties who transact with Iran. As noted above, the US government has consistently and unequivocally accused Iran of supporting international terrorism and committing human rights abuses and has accused the IRGC of using the Iranian oil trade to advance its malign activities. 

However … Potential Opportunity?

An important question is whether GL X is intended to simply return vessel traffic through the Strait of Hormuz to prewar levels of trade or rather to promote new and increased trade flows relative to the prewar status quo. Therefore, despite the risks discussed in this alert, companies may wish to closely evaluate whether there are opportunities now or soon emerging that align with US policy. 

As noted above, the MOU and GL X could reflect the Trump Administration’s willingness to provide broader sanctions relief to Iran as part of a grand deal over Iran’s nuclear program, which would present important commercial and financial opportunities and potentially reduce geopolitical risk. Because GL X creates a narrow, time-limited opportunity to conduct transactions in the context of still-complex Iranian sanctions, clients should seek tailored advice before acting. WilmerHale can help evaluate whether proposed activity is authorized, manage residual legal and other risks, and prepare for rapid changes in US policy.

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WilmerHale’s Sanctions, Financial Crimes and Export Controls Practice will continue to monitor developments and publish client guidance as the terms of any agreement emerge. For questions about the legal framework discussed in this brief or to discuss specific compliance implications for your business, please contact your WilmerHale relationship attorney or visit our Sanctions, Financial Crimes and Export Controls Practice page.