Towards that end, on June 22, 2026, the Office of Foreign Assets Control (OFAC) of the U.S. Department of the Treasury published General License X (GL X), authorizing specific transactions ordinarily incident and necessary to the production, sale, delivery, or offloading of crude oil, petrochemical products, or petroleum products of Iranian origin.
On the other hand, the EU and UK sanctions regimes remain in place. Businesses will have to navigate a fragmented regulatory landscape and carefully consider their use of funds in connection with Iran.
The memorandum of understanding
On June 17, 2026, the U.S. signed the MoU with Iran, signaling a commitment to terminating all sanctions against Iran. Shortly thereafter, as an initial step, OFAC issued GL X. The key provisions of the MoU pertaining to sanctions are summarized below.1
- Sanctions relief: The U.S. committed to terminating all unilateral U.S. sanctions against Iran and to seeking the termination of UN Security Council (UNSC) resolutions and International Atomic Energy Agency Board of Governors resolutions, on a timetable to be finalized as part of a final deal. In the meantime, the U.S. committed not to impose any new unilateral sanctions on Iran.
- Cessation of armed hostilities: The U.S. and Iran declared an immediate and permanent end to military operations on all fronts, including in Lebanon, with a final deal to be negotiated over the next 60 days.
- Shipping and naval blockade: The U.S. committed to removing its naval blockade and Iran, in turn, agreed to use best efforts to ensure safe passage through the Strait of Hormuz.
- Iran’s frozen funds: The U.S. committed to making available Iran’s frozen funds to any ultimate beneficiary designated by the Central Bank of Iran and to grant the necessary licenses and authorizations.
- Iran’s nuclear program: Iran reaffirmed that it will not procure or develop nuclear weapons. The disposition of Iran’s stockpiled enriched material remains under discussion.
General License X
The MoU signals a potential overhaul of the current U.S. Iran sanctions program. The U.S. committed to imposing no new sanctions while the parties negotiate a final deal and represented that the U.S. would undertake to terminate “all types of sanctions against the Islamic Republic of Iran,” including by seeking the lifting of UNSC resolutions, on a timetable not yet negotiated.
In the interim, the Treasury Department would issue waivers for the export of Iranian crude oil, petroleum products, and derivatives, and all associated services including banking, transactions, insurance, and transportation. This commitment was reflected in GL X, authorizing 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 origin, including transactions involving vessels blocked under enumerated authorities, until August 21, 2026. GL X specifically authorizes importation into the U.S. and payment in U.S. dollar-denominated funds. Overall, the timing for implementation of sanctions relief is unclear, and whether broader, enduring changes to the program will outlast current U.S. policies toward Iran remains uncertain.
The EU, UK, and other allied jurisdictions
The EU and UK currently maintain their own extensive autonomous sanctions regimes against Iran, which go well beyond the baseline UNSC restrictions.2 These have been progressively intensified in recent years, in the light of deteriorating relations between Tehran and the West.
At present, these autonomous restrictions include asset freezes, sectoral sanctions targeting financial and insurance services, and export controls across a large swathe of goods and technology. Notably, the EU designated the Islamic Revolutionary Guard Corps (the IRGC) as a terrorist organization in February 2026,3 and the UK is actively considering proscribing the IRGC under its own anti-terrorism legislation.
In contrast with the U.S., it remains unclear whether the EU and UK will ultimately also lift their own autonomous sanctions against Iran. Neither is a party to the MoU, and both have largely been sidelined in the U.S. negotiations with Iran (which are being mediated by Pakistan and Qatar). Shortly after the signing of the MoU, the UK, France, Germany, and Italy published a joint statement suggesting that they would be “prepared to lift relevant sanctions in response to clear, verifiable steps by Iran on its nuclear program”.4
However, on June 19, 2026, France, in its capacity as a permanent member of the UNSC, appeared to retreat from this position, making clear that it would not approve the lifting of UNSC sanctions unless Iran also makes major concessions on its ballistic missile program and support for proxies—neither of which the MoU appears to address.5 The direction of travel in the UK appears aligned with that of France, with the UK HM Treasury’s Office of Financial Sanctions Implementation announcing on June 29, 2026 that it expects to bring a wave of Iran sanctions-related enforcement actions in the near future.6
This position is largely mirrored across the G7 and allied jurisdictions. Canada, for example, has imposed a full asset freeze on Mohammed Bagher Ghalibaf (the Speaker of the Iranian Parliament and leader of Iran’s negotiating team) in response to alleged human rights violations, even though Ghalibaf is not targeted by U.S. sanctions.
Practical considerations
If U.S. sanctions against Iran are relaxed in the coming months whilst EU, UK and other allied sanctions remain in place, the result will be a fragmented regulatory landscape that will demand careful navigation. Businesses should not assume that a green light from Washington necessarily translates into the ability to do business with Iranian counterparties or otherwise in connection with Iran. The picture is likely to remain complex, particularly for businesses with operations across multiple jurisdictions. The following considerations should be kept in mind as negotiations evolve in the coming weeks and months.
- Regulatory fragmentation: Any entity with a nexus to the EU, UK, or other allied states may remain bound by those jurisdictions’ sanctions regardless of U.S. policy changes. Activities permissible under U.S. law may remain prohibited elsewhere.
- Geopolitical uncertainty: Sanctions against Iran could be reinstated even if lifted as part of a final deal. As Syria demonstrated, sanctions relief does not necessarily attract immediate investment. Caution is likely to persist in the near term.
- Financing restrictions: Major international lenders routinely restrict use of proceeds in connection with sanctioned territories. Iran has long been within scope of those restrictions. Businesses considering Iran-related activities should review their existing financing and commercial agreements closely.
- Wider compliance risks: Sanctions relief will not eliminate anti-bribery, anti-money laundering, and fraud risks. Persons subject to the U.S. Foreign Corrupt Practices Act or the UK Bribery Act will need to exercise heightened caution with respect to Iran.
- Due diligence challenges: Iran lacks the corporate transparency of Western economies. Reliable information on ownership and control is difficult to obtain, particularly for businesses with IRGC shareholders or ties—a critical factor in sanctions risk calibration.
It is far from certain that a more detailed peace agreement will be settled. The MoU is a high-level political commitment rather than a final agreement, and there is no guarantee that U.S. sanctions relief—beyond GL X—will materialize on the timetable contemplated, if at all. Equally, if a final deal is reached and supported by China, Pakistan, as well as Middle Eastern states such as Qatar, the UAE, and Oman, pressure may build on the EU, UK, and other allied states to revisit their positions and start to ease sanctions. The UN position, as well as the UNSC’s sanctions as currently implemented by UN member states, will also play a central role.
Trade links and passages with Iran are unlikely to be opened anytime soon. Ongoing geopolitical uncertainty will persist even after a final deal is reached, and broader issues in the region would also need to be taken into account. A complex, multi-speed picture may emerge, with businesses in different jurisdictions adopting differing approaches depending on their global sanctions exposure, historical and future constraints imposed by their lenders and their general level of wariness over Iran.
Find out more
Should you have any questions, please get in touch with the authors or your key contacts at A&O Shearman.
Footnotes
1. Our comments are based on the text of the MoU reported in publicly available sources.
2. We discuss the EU and UK’s sanctions against Iran in our publication dated December 10, 2025.
3. Council of the EU.
4. Embassy of France in the United States.
5. Reuters.
6. OFSI’s interview with the Financial Times.
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