On July 7, 2026, OFAC revoked Iran General License X (GL X) and replaced it with General License X1 (GL X1). The waiver, which had been due to run until August 21, lasted barely two weeks. GL X1 is not a continuation; it is a narrow wind-down authorization that expires on July 17, 2026.

What changed

Three tankers were attacked in the Strait of Hormuz on July 7 and  Washington pulled GL X immediately, a warning of the consequences for Iran’s alleged actions in the strait. Oil prices jumped, and one struck vessel, an LNG carrier, was reportedly at risk of explosion.

GL X had temporarily authorized transactions relating to the production, sale, delivery, and offloading of Iranian-origin crude oil, petrochemicals, and petroleum products. See our previous post on GL X here. The critical point now is that GL X is no longer available, and OFAC can revoke any general license at any time. Parties should structure transactions accordingly.

What GL X1 permits

GL X1 authorizes only transactions ordinarily incident and necessary to wind down activity previously authorized under GL X, through 12:01 a.m. EDT on July 17, 2026. Its limits are strict:

• No new business: no new purchases and no loading of Iranian product on or after July 7.
• Any payment to a blocked person must be deposited into a blocked, interest-bearing account in the United States.
• The license is confined to petroleum and does not authorize activity prohibited under other US sanctions programs.
• Transactions involving North Korea, Cuba, Crimea, or the covered/occupied regions of Ukraine (including entities owned or controlled by, or in a joint venture with, such persons) are excluded.

The EU, UK, and insurance risk

While it was in place, GL X provided no safe harbor under EU or UK law.

The EU continued to prohibit the purchase, import, transport, and insurance of Iranian-origin oil irrespective of destination. The September 2025 recast expanded the regime further, including bans on servicing vessels believed to carry sanctioned goods and on providing classification, inspection, or technical assistance to certain Iranian tankers. The UK regime is designation-based; designated Iranian vessels are barred from UK ports and may be detained. NIOC and the National Iranian Tanker Company are designated by the EU, UK, and Switzerland, so a US license does not resolve those restrictions.

The London market and UK-based P&I Clubs insure the substantial majority of global commercial shipping. Even where a trade is lawful under UK sanctions, restrictions affecting International Group pooling arrangements, EU-based pooling partners, or reinsurers can block recovery on a large claim; under Rule 5V, the shortfall falls back on the member. The risk is not just a fine: it can be a catastrophic, uninsured casualty. Many shadow-fleet tankers that Iran historically used were already sanctioned under UK, EU, and Swiss programs, often under Russia measures.

What market participants should do now

• Identify every live transaction booked under GL X and map what is incident and necessary to winding it down by July 17.
• Run enhanced due diligence on counterparties for North Korea, Cuba, Crimea, and Ukraine exposure, including ownership, control, and joint-venture links.
• Assess EU and UK exposure independently; do not assume the US position governs.
• Route any payment to a blocked person into a blocked, interest-bearing US account.
• Talk to banks early about processing wind-down payments, and to P&I Clubs and insurers about whether cover responds.
• For anything that cannot be completed by July 17, consider a specific OFAC license application.
• Monitor OFAC guidance daily as the position may change again.

Conclusion

The GL X experiment was real but temporary, sector-specific, unilateral, and extraordinarily short-lived. The wind-down closes on July 17, 2026. Until Brussels and London follow Washington, the safest assumption is that the most exposed counterparty (often the insurer or the bank) sets the practical limit on what is permissible.

The Reed Smith sanctions team is available to assist clients in assessing the implications of GL X1 for their operations and to advise on structuring compliant transactions within its scope.