Iran General License X, "Authorizing the Production, Delivery and Sale of Crude Oil, Petrochemical Products, and Petroleum Products of Iranian-Origin through August 21, 2026."

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TURBOFAC Commentary (606 words)

Notes:

1) This , issued in connection with article 10 of the June 2026 “Islamabad Memorandum of Understanding between the United States of America and the Islamic Republic of Iran,” is uniquely broad as it relates to dealings in or related to Iranian energy. (The relevant portion of the MOU is Article 10, which states that “[t]he United States undertakes that immediately after the signing of this Memorandum of Understanding, and until the date of the lifting of sanctions, the United States Treasury Department will issue waivers for exports of Iranian crude oil, petrochemical products and their derivatives, and all related services, including banking, insurance, transportation, and the like.” As discussed below, the GL is notably quite a bit broader than what is envisaged in the MOU insofar as it is more than a “waiver” (a term of art used in the secondary sanctions context) and does more than cover “exports” and related services.

2) Compare Iran General License U, and comments thereto, which served as the model for this GL and which was issued in the midst of the early 2026 war between the U.S./Israel and Iran for purposes of ensuring sufficient oil reached the global market. Key distinctions between the two licenses are as follows:

• This license covers 13846, pursuant to which many vessels and Iran-linked oil traders are sanctioned.

• This license does not have the condition that relevant products be “loaded on” a vessel prior to any given date.

• This license covers “petroleum products,” a term which is not defined in the GL but is defined identically at section 16(o) of EO 13846 and section 561.319 of the (both authorities pursuant to which this license was issued). Those definitions include open lists of what constitutes petroleum products, with certain specified exclusions. See the annex to Venezuela General License 46B and query whether certain of the products listed would fall within the scope of the term “petroleum products” as set out in the GL.

• The GL covers transactions “ordinarily incident and necessary to the production” of covered products. This is a notable distinction, and it is unclear how far upstream this term would be interpreted to extend (would it cover, for example, on-the-ground services to repair infrastructure? The exportation of goods and services for that purpose?)

• The interpretive “note 1 to paragraph (a)” clarifies that transactions related to “products held in storage” are covered, in addition to products on vessels.

• An interpretive note specifies that “[a]ny 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 of Iranian origin authorized by paragraph (a) may be made in U.S. dollar-denominated funds.” But note the requirements of 560.526, which presumably apply here given the relationship between the GL and the (all transactions implicating the prohibition at 560.206).

3) Note that the GL would license transactions with the “so-called Persian Gulf Strait Authority (PGSA)” (SDGT only, see e.g. FAQ # 1249), but not the , which is blocked pursuant to authorities not listed in the header of the license (FTOSR, EO 13848). It is clear that OFAC does not consider the IRGC to have an “interest” in all purchased from the (otherwise this GL would be useless).

4) Once the GL expires, transactions or dealings in or related to the Iranian origin oil will once again be prohibited even if purchased pursuant to the GL in a way that extinguish all GOI interest, but note the GL at 560.518 that would authorize continued dealings in such oil if imported into the United States.

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Iran General License X, "Authorizing the Production, Delivery and Sale of Crude Oil, Petrochemical Products, and Petroleum Products of Iranian-Origin through August 21, 2026."

TURBOFAC Commentary (606 words)