OFAC Authorizes a Range of Iran Energy-Related Activities Through August

On June 22, 2026, the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) issued General License X (“GL X”), authorizing a range of Iran energy-related activities including production, sale, delivery, or offloading of crude oil, petrochemical products, and petroleum products of Iranian origin through August 21, 2026. GL X represents the first concrete sanctions relief implemented by the United States following the signing of the Islamabad Memorandum between the United States and Iran on June 17, 2026.

While the Memorandum reportedly contemplates substantially broader sanctions relief, market participants should distinguish between the political commitments reflected in the Memorandum and legally effective sanctions relief. At present, GL X constitutes the principal operative sanctions measure implemented by the United States, while the broader commitments described in the Islamabad Memorandum remain subject to further negotiations and additional US government action. Companies should carefully review the scope and conditions of GL X before engaging in any Iran-related activities, as transactions falling outside its authorization remain subject to the primary and secondary US sanctions against Iran.

Below, we analyze the scope and limitations of GL X and discuss several provisions of the reported Islamabad Memorandum that are most relevant from a sanctions perspective to companies contemplating their next steps in light of these important developments.

Background: The Islamabad Memorandum

On June 17, 2026, the United States and Iran signed the Islamabad Memorandum, a 14-point memorandum of understanding intended to end hostilities and establish a framework for negotiations toward a comprehensive agreement. As of this writing, an official text of the Islamabad Memorandum has not been published by the US government. Accordingly, market participants should treat the reported text of the Memorandum as a framework for analysis, rather than an authoritative legal text.

The Islamabad Memorandum is not a final agreement. Rather, it establishes a 60-day negotiating window—extendable by mutual consent—during which the parties will attempt to negotiate a more comprehensive agreement. Although certain provisions of the reported Memorandum contemplate immediate implementation, many commitments remain subject to subsequent negotiations or additional US government action.

Except to the extent reflected in operative US legal authorities such as GL X, the reported sanctions relief commitments remain non-operative absent additional waivers, General Licenses, regulatory amendments, or statutory changes.

General License X: Scope and Limitations

Scope: GL X authorizes all transactions ordinarily incident and necessary to the production, sale, delivery or offloading of crude oil, petrochemical products, or petroleum products of Iranian origin, including transactions involving vessels blocked under various Iran sanctions authorities.

The GL expressly clarifies that it authorizes a range of vessel related transactions, imports into the United States, and US dollar payments as follows:

• Transactions for the safe docking and anchoring of vessels carrying such crude oil, petrochemical products, or petroleum products;
• The preservation of the health or safety of the crew of any such vessel;
• Emergency repairs or environmental mitigation or protection activities relating to any such vessel or to such crude oil, petrochemical products, or petroleum products held in storage;
• Services such as vessel management, crewing, bunkering, piloting, registration, flagging, insurance, classification, and salvage;
• Importation into the United States of crude oil, petrochemical products, and petroleum products of Iranian origin, where such importation is ordinarily incident and necessary to the sale, delivery, or offloading of such crude oil, petrochemical products, or petroleum products authorized by the GL; and
• Payments in US dollar-denominated 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 the GL.

The GL also clarifies that the Iranian-origin crude oil, petrochemical products, and petroleum products covered under the license include those produced by entities sanctioned under the  Iranian Transactions and Sanctions Regulations (31 CFR part 560), Iranian Financial Sanctions Regulations (31 CFR part 561), or the Global Terrorism Sanctions Regulations (31 CFR part 594). OFAC has previously defined the terms “petroleum products” and “petrochemicals” in the context of the Iran sanctions (OFAC FAQ 620). However, it has not yet provided guidance on whether those are the operative definitions for purposes of GL X.

Validity Period: Valid through 12:01 am ET, August 21, 2026.

Limitations: GL X does not authorize any transactions involving parties located in or organized under the laws of North Korea, Cuba, the so-called Donetsk People’s Republic, the so-called Luhansk People’s Republic, the Crimea region of Ukraine, or their owned or controlled affiliates and joint ventures. Furthermore, GL X does not authorize activities prohibited under OFAC sanctions regimes other than those listed in the text of the GL, which include not only Iranian sanctions specific authorities, but also the Russia sanctions programs (31 CFR Parts 587 and 589) the Global Terrorism sanctions program (31 CFR Part 594) and the Weapon of Mass Destruction Proliferators sanctions program (31 CFR Part 544).

Other Contemplated Sanctions Relief

Apart from the Iran energy-related sanctions relief provided through GL X, Paragraph 7 of the Islamabad Memorandum reportedly contemplates terminating “all types of sanctions” against Iran, including the United Nations Security Council resolutions, the I.A.E.A. Board of Governors resolutions, and all unilateral US sanctions, primary and secondary, in an agreed-upon schedule as part of a final agreement, while Iran simultaneously addresses its enriched uranium stockpile and other nuclear commitments.

To the extent OFAC-administered sanctions are relaxed prior to regulatory amendments, such relief would likely be implemented through additional General Licenses or other licensing actions before the underlying regulations are amended or repealed.

It is also important to recognize that many Iran sanctions are statutory, including those imposed under the Iran Sanctions Act of 1996, the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010, and the Countering America's Adversaries Through Sanctions Act. Permanent repeal of sanctions imposed pursuant to those statutes would generally require congressional action rather than executive branch action alone. Accordingly, the durability of any sanctions relief will likely depend on future nuclear commitments, verification mechanisms, and legislative developments.

The reported Islamabad Memorandum likewise does not address whether and how US export controls or list-based sanctions, including SDN designations, would be affected. By comparison, under the Joint Comprehensive Plan of Action (“JCPOA”), OFAC issued General License H  (“GL H”), which authorized certain Iran-related transactions by foreign entities owned or controlled by US persons. However GL H did not authorize exports or reexports of US-origin goods, software, or technology, transactions involving the US financial system, or dealings with SDN-listed parties. Whether any future Iran-related authorizations will follow a similar model remains uncertain.

Finally, implementation of any comprehensive agreement may implicate the Iran Nuclear Agreement Review Act of 2015 (“INARA”), which requires agreements relating to Iran's nuclear program to be transmitted to Congress within five days, and provides for a 30-day congressional review period during which the President generally may not waive or suspend statutory sanctions. Whether the Islamabad Memorandum or any subsequent comprehensive agreement would trigger INARA remains to be seen. Any congressional effort to block implementation would require both chambers to pass a joint resolution of disapproval capable of overcoming a presidential veto.

Frozen Iranian Assets

The timeline for the release of frozen Iranian assets also remains uncertain. Under Point 11 of the reported Islamabad Memorandum, the United States undertakes to make Iran's frozen or restricted funds and assets “fully available for use.” The reported Memorandum does not specify when this would occur, although Point 13 suggests that implementation of this commitment would need to begin before negotiations on a final agreement could proceed.

According to a senior US official, assets would be released in phases as Iran demonstrates compliance with its commitments. Iranian officials estimate that more than $100 billion in Iranian assets remain frozen abroad across multiple jurisdictions, including approximately $2 billion in the United States, $20–50 billion in China, approximately $15 billion in Iraq, roughly $7 billion each in India and South Korea, and between $5 billion and $7 billion in Qatar. For comparison, implementation of the JCPOA resulted in the release of approximately $50 billion in Iranian assets.

Looking Ahead

The issuance of GL X marks the first concrete implementation of the sanctions relief contemplated by the Islamabad Memorandum. Nevertheless, the Memorandum remains a preliminary political framework rather than a self-executing legal instrument or a final normalization agreement.

Apart from the activities specifically authorized by GL X, US primary and secondary sanctions—and US export controls applicable to Iran—remain substantially unchanged absent additional OFAC authorizations, regulatory amendments, or statutory changes. Companies should therefore continue to base their compliance posture on operative US legal authorities rather than on the reported terms of the Islamabad Memorandum.

The situation remains highly dynamic and subject to rapid change. Companies should continue to monitor OFAC guidance, additional licensing actions, executive branch implementation measures, and congressional developments over the coming weeks. While GL X may present new commercial opportunities for some companies, any Iran-related activity should be undertaken only after careful review of the scope and conditions of the applicable US authorizations. Mayer Brown will continue to monitor developments and provide updates as additional guidance becomes available.