THE US has formally waived sanctions on Iranian oil for a 60-day period, in line with the memorandum of understanding agreed to by Washington and Tehran last week.

The Office of Foreign Assets Control on Monday published General License X, which authorises a broad array of transactions pertaining to shipments of Iranian crude, petroleum products and petrochemical products through to August 21.

While the US temporarily waived sanctions on Iranian oil in March under General License U, allowing crude and refined products already loaded on tankers to be sold, the latest licence is broader in scope, and marks the largest relief for Iran’s oil and petrochemical sectors since US President Donald Trump reimposed sanctions on Iran during his first term.

“This is like General License U on steroids,” said Claire O’Neill McCleskey, co-founder of Clarity Compliance Consulting and former head of Ofac’s compliance division.

The newly issued General License X authorises all transactions that are “ordinarily incident and necessary to the production, sale, delivery or offloading of crude oil, petrochemical products or petroleum products of Iranian origins” and are otherwise prohibited under one or more of 11 authorities listed in the licence, including transactions involving vessels that were sanctioned under those authorities.

Imports of Iranian oil to the US are also allowed. However, despite the wide scope of the licence, substantial risks remain to US persons seeking to engage in Iranian oil trades.

“Given the risks around dealing with the Islamic Revolutionary Guards Corps, which have not been waived by General License X, it’s going to be challenging for US persons to operationalise this license,” McCleskey said.

Manny Levitt, a trade attorney at Holland & Knight, said that while the licence would “provide some comfort” to foreign companies about secondary sanctions risks associated with Iranian oil trades, “it does not mitigate all of the legal risks that might arise from dealing with the IRGC, which remains designated as a Foreign Terrorist Organization”.

“Companies dealing with the IRGC and IRGC-linked entities, even indirectly, would still need to consider the risks they might face under separate US laws that criminalise knowingly providing ‘material support’ to a designated FTO and permit victims of acts of terrorism carried out by an FTO to bring civil lawsuits against persons who have provided substantial assistance to that FTO,” Levitt told Lloyd’s List.

“Importantly, these other legal authorities would apply regardless of whether General License X permits a particular transaction or activity.”

These legal issues will likely deter many US companies from using the licence, especially given the IRGC’s significant involvement in Iran’s energy sector and “its role as the de facto administrator” of the Strait of Hormuz, Levitt said.

Networks that already had moved Iranian oil in the past prior to the Trump administration turning up the pressure in his second term are likely to be first movers to carry out purchases under the licence, McCleskey said.

India, which made use of the waiver issued in March, will also likely take advantage of the new licence.

NITC tankers reemerge

While Iranian oil flowed relatively unimpeded during the first month of the war, exports fell substantially in the weeks prior to the MoU’s signing as the US blockade, imposed in April, tightened.

However, since the blockade was lifted last week, over a dozen National Iranian Tanker Company tankers, which normally sparsely broadcast Automatic Identification System data, could be tracked via AIS in the Gulf of Oman and Arabian Sea sailing southwards, with their draughts indicating that they were laden. Several other Iran-flagged tankers could be tracked ballasting towards Iran.

The outbound Iran-flagged tankers included 13 VLCCs and two suezmaxes, which can carry a combined 28m barrels of crude. A further three laden, non-Iran flagged VLCCs under US sanctions transited Hormuz outbound on Monday, Lloyd’s List Intelligence data showed.

The sanctions relief, coupled with the lifting of the US blockade, will provide Iran with “billions in oil revenue”, McCleskey said.

Meanwhile, ship-to-ship transfers of non-Iranian cargoes off Fujairah and Sohar continued to take place over the weekend, with at least one party typically dark.

Lloyd’s List analysis of satellite imagery taken on Sunday showed six VLCCs engaging in STS transfers off Fujairah and Sohar.