Oil sector and OFAC “tanker” licenses
OFAC tanker licenses authorize specific categories of oil-sector transactions that would otherwise violate U.S. sanctions programs targeting Iran, Russia, Venezuela, and other designated jurisdictions. Two distinct types exist: general licenses apply broadly to defined transaction categories without requiring individual application, while specific licenses demand case-by-case OFAC review and approval for transactions outside general license parameters.
The Iran Sanctions Program prohibits all U.S. persons—and foreign entities using U.S. financial infrastructure—from purchasing, transporting, insuring, or financing Iranian crude oil and petroleum products unless explicitly authorized by OFAC. Russia-related sanctions work differently. They restrict transactions in Russian petroleum above the G7/EU-agreed price cap mechanism, currently set at $60 per barrel for crude and tiered levels for refined products.
General License U, issued March 20, 2026, shows how temporal restrictions actually work. It permitted the sale, delivery, transport, and unloading of Iranian-origin crude oil and petroleum products, but only for cargo that was already loaded onto vessels prior to March 20, 2026. The license expired April 19 at 12:01 a.m. EDT—a 30-day window to complete contracted deliveries without triggering blocking sanctions or civil penalties. Here’s the practical problem: if your loading operation spanned April 18-20, OFAC treats the entire cargo as loaded after cutoff, voiding your license protection completely.
Without these licenses, any U.S. person or foreign entity transacting through U.S. correspondent banks faces automatic violation exposure. Civil penalties under the International Emergency Economic Powers Act reach up to the greater of twice the transaction value or statutory maximums adjusted annually for inflation—currently exceeding $300,000 per violation as of 2026. Criminal penalties for willful violations include fines up to $1 million and imprisonment up to 20 years.
Legal teams specializing in OFAC compliance advise oil companies to verify license applicability before signing purchase contracts, not after cargo loading. The temporal cutoff dates in general licenses are strictly enforced; OFAC has rejected arguments that “constructive loading” or vessel approach to terminal constitutes sufficient nexus when actual loading occurred after the cutoff.
Oil sector and OFAC “tanker” licenses
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Contact a lawyer →How Does General License 134B Differ From Other OFAC Oil Sector Authorizations?
General License 134B represents an emergency-response mechanism within OFAC’s sanctions architecture. Issued April 17, 2026, it temporarily authorized transactions necessary for the sale, safe docking, unloading, and insurance of vessels carrying Russian crude oil and petroleum products, provided cargo was loaded onto tankers before April 17, 2026. The license expired May 16—a precise 30-day operational window, no extensions.
Three critical differences separated GL 134B from standard sectoral authorizations. First: it applied retroactively to cargoes already in transit, addressing immediate market disruption rather than prospective planning. Second: it explicitly covered insurance and maritime services—activities typically excluded from general authorizations due to secondary sanctions risk. Third: OFAC announced in advance that May 16 would mark a return to strict price cap enforcement with no extension.
The market impact proved dramatic. Cargo tracking data published by Kpler in May 2026 showed Indian refiners importing a record 2.3 million barrels per day of Russian crude in May, with the majority of those cargoes loaded in late March and early April to capture GL 134B authorization. Chinese independent refiners similarly accelerated April loadings, creating a May cargo backlog that strained Asian port capacity.
OFAC’s Sanctions List Service maintains the current repository of active general licenses. As of June 2026, no successor to GL 134B has been issued. Enforcement has reverted to the Coalition price cap attestation requirements introduced in December 2022—vessel operators must now certify that Russian crude was purchased at or below $60 per barrel, with documentary evidence maintained for five years and subject to OFAC audit.
Specific licenses work through a different path entirely. Applicants submit individual cases through OFAC’s online portal, averaging six to nine months for processing. Companies must demonstrate that the transaction serves U.S. policy objectives or that blocking it would create undue hardship inconsistent with sanctions program goals. Approval rates for oil-sector specific licenses targeting Russian and Iranian petroleum remain below 15% as of 2026, according to OFAC’s Annual Report to Congress.
What Does the Iran Sanctions Program Require for Tanker Operations Under General License U?
The Iran Sanctions Program operates under Executive Order 13846 (reimposed November 2018 following U.S. withdrawal from the Joint Comprehensive Plan of Action) and prohibits all transactions by U.S. persons involving Iranian crude oil, condensate, and petroleum products. General License U, valid March 20 through April 19, 2026, provided a narrow carve-out for cargoes loaded before March 20, permitting completion of in-transit deliveries without market disruption.
Three compliance elements must be verified before GL U protection applies. First, the vessel’s automatic identification system (AIS) data must document loading completion prior to 12:01 a.m. EDT on March 20, 2026. Second, all counterparties—vessel owners, charterers, cargo traders, insurers, end-purchasers—must be screened against OFAC’s Specially Designated Nationals and Blocked Persons List. Third, companies must maintain full documentary records for a minimum of five years, including bills of lading, cargo manifests, insurance certificates, and payment records.
OFAC’s Iran Sanctions Program FAQ 1027, updated March 2026, clarifies a critical boundary: GL U authorization does not extend to new contracts signed after March 20. Companies cannot enter contingent agreements for future Iranian crude purchases and retrospectively claim GL U coverage if cargo happens to load before a license expires. This contrasts with OFAC’s Venezuela sanctions framework, where contingent contracting subject to later specific license approval is expressly permitted under General License 44A. Miss this distinction and your entire transaction voids.
Violations of Iranian petroleum sanctions carry the IEEPA statutory maximum: civil penalties up to $20,000 per violation (adjusted for inflation to approximately $356,579 as of 2026) or twice the value of the underlying transaction, whichever is greater. Criminal exposure applies when OFAC establishes willfulness—either actual knowledge of the violation or reckless disregard for sanctions compliance obligations.
The National Iranian Tanker Company (NITC) and 27 of its vessels remain on the SDN List as of June 2026, following their October 2020 designation for transporting Iranian petroleum in support of the Islamic Revolutionary Guard Corps-Qods Force. Any transaction involving NITC-operated or NITC-owned vessels automatically triggers blocking sanctions, regardless of cargo origin or general license applicability. Companies must verify vessel ownership chains through maritime registries, not just vessel names—NITC frequently reflag and rename tankers to evade detection.
How Do Russia-Related Sanctions Affect Tanker License Conditions After May 2026?
Russia-related sanctions enforcement reverted to strict price cap compliance on May 17, 2026, following General License 134B’s expiration. The G7/EU price cap mechanism, introduced in December 2022 and codified in U.S. regulations at 31 CFR 515.582, prohibits U.S. and EU persons from providing maritime services—shipping, insurance, brokering, financing—for Russian crude oil purchased above $60 per barrel or refined products purchased above tiered caps ($100 for premium products, $45 for discounted products).
The price cap operates as a services ban, not a purchase prohibition. Non-U.S. and non-EU entities may purchase Russian petroleum at any price, but they forfeit access to Western insurance, financing, and shipping services if the purchase price exceeds the cap. In practice, this forces a hard choice: pay above-cap prices and self-insure vessels (viable only for state-owned or captive tanker fleets), or comply with the cap to access Lloyd’s of London underwriters and international ship registries.
GL 134B suspended these restrictions for one month, but only for cargoes already loaded. As of May 17, 2026, vessel operators must obtain and retain price attestations from cargo sellers. Insurers must verify attestations before binding coverage. All parties must maintain records for five years. OFAC has conducted approximately 40 audits of price cap compliance in 2026, with three enforcement actions announced as of June 2026 involving insurers who failed to obtain sufficient documentation.
Russia’s “shadow fleet”—over 600 tankers as of 2026 by Lloyd’s List Intelligence—operates outside the price cap framework. These vessels rely on non-Western insurance (Russian, Chinese, UAE providers), aging hulls (average 17 years old versus 10 globally), and opaque ownership buried in weak-disclosure jurisdictions. OFAC has designated 145 individual shadow fleet vessels on the SDN List since January 2024, focusing on those involved in illicit transshipment, AIS manipulation, or ownership by sanctioned Russian entities. What this means for your compliance team: every counterparty in a tanker transaction now requires not just a sanctions check, but beneficial ownership verification—a process that can add 5–7 business days to deal closing.
License amendments happen constantly. OFAC modified General License 8A six times between January 2022 and June 2026, each narrowing permitted activities. Companies relying on general licenses must check the OFAC Recent Actions page daily. Waiting for legal counsel to notify you introduces a 24- to 48-hour lag—during fast-moving cargo transactions, that delay alone can result in violations.
What Are the Step-by-Step Compliance Requirements When Operating Under an OFAC Tanker License?
Compliance with OFAC tanker licenses requires a documented five-step process that legal and compliance teams must execute before, during, and after each transaction. Failure at any step can void license protection and trigger enforcement action, even if the underlying cargo transaction was otherwise permissible.
Step 1: License Identification and Verification (Pre-Contract)
Before signing any crude purchase agreement or charter party, identify the applicable general license and confirm it remains active. Check OFAC’s official repository at ofac.treasury.gov, note the license number, effective date, and expiration date. General licenses may be superseded, amended, or revoked without advance notice. Relying on outdated legal memoranda or industry summaries creates liability. For transactions not covered by general licenses, submit specific license applications—expect a six- to nine-month review period, which means filing in January for a June closing is optimistic at best.
Step 2: Counterparty and Vessel Sanctions Screening (Pre-Loading)
Screen all transaction participants against the SDN List, Consolidated Sanctions List, and List of Foreign Sanctions Evaders. This includes vessel owner, operator, charterer, cargo owner, seller, insurance provider, reinsurance provider, port agent, and ultimate consignee. Vessel screening must verify registered owner, beneficial owner, and technical manager—sanctions designations often target beneficial owners while leaving registered shell companies untouched. Conduct screening 48 hours before loading and again immediately before the vessel approaches the loading terminal. The risk here is real: a counterparty designated between contract signature and loading leaves you holding an unlicensed shipment.
Step 3: Loading Date Documentation (During Operations)
License protection hinges on documentary proof of the loading date. Collect and preserve timestamped evidence: AIS position reports showing the vessel alongside the terminal; terminal operator hose connection confirmations; bills of lading with cargo loading completion timestamps; ullage reports (tank measurement records). OFAC rejects post-hoc certifications. Contemporaneous records generated during loading are the only acceptable evidence. Digital timestamps must be preserved in unalterable formats such as blockchain-verified logs or third-party timestamping services. If your crew forgets to document hose connection time on the day of loading, you cannot recreate that proof months later during an audit.
Step 4: Transaction Recordkeeping (Post-Delivery)
31 CFR 501.601 requires preservation of a full and accurate record of every transaction subject to sanctions programs for a minimum of five years. Required records: contracts, amendments, invoices, payment records, insurance certificates, bills of lading, AIS data, sanctions screening results, internal compliance approvals, and legal memoranda analyzing license applicability. Organize by transaction and produce within 10 business days of an audit request. A missing screening result or unsigned compliance checklist can cost millions in penalties, even if the underlying transaction was lawful.
Step 5: Voluntary Self-Disclosure (If Violations Are Discovered)
OFAC’s Economic Sanctions Enforcement Guidelines (November 2024) identify voluntary self-disclosure as the most significant mitigating factor in penalty calculations. If internal audits uncover potential violations—a cargo that loaded one hour after a general license cutoff, a counterparty added to the SDN List after contract signature—consult experienced OFAC counsel regarding voluntary disclosure. OFAC reduces civil penalties by 50% for disclosures made before detection, with further reductions for robust remedial measures. Non-disclosure of known violations increases penalties and may trigger criminal referral to the Department of Justice. The difference between disclosure and silence can be $20 million versus $40 million.
| Compliance Step | Timeline | Responsible Party | Documentation Required | OFAC Audit Frequency |
|---|---|---|---|---|
| License verification | Before contract signature | Legal/Compliance | License text, expiration date, saved PDF | Annual desk audits (5% of licensees) |
| Sanctions screening | 48 hours before loading | Compliance | SDN search results, timestamp, analyst approval | Onsite audits (selected cases) |
| Loading date proof | During cargo operations | Operations/Legal | AIS logs, bills of lading, ullage reports | Enforcement actions (post-violation) |
| Recordkeeping | Within 24 hours of completion | Compliance | Full transaction file per 31 CFR 501.601 | 5-year retention, 10-day production |
| Voluntary disclosure | Immediately upon discovery | Legal/Executive | Internal investigation report, remediation plan | N/A (mitigating factor only) |
When and How Should Oil Companies Search the OFAC General License Database?
OFAC maintains its official general license archive at the Selected General Licenses page on ofac.treasury.gov, organized by sanctions program (Iran, Russia, Venezuela, North Korea, Syria, Cuba). The database allows filtering by license number, effective date, expiration date, and program. Do not rely on third-party aggregators, law firm alerts, or industry summaries—only the official OFAC text governs your transaction.
Conduct license searches at three critical moments. First, during commercial negotiations before signing, identify applicable general licenses and confirm the planned transaction falls within scope. Second, 48 hours before cargo loading, recheck the license for amendments, supersessions, or revocations. OFAC publishes regulatory updates on the third Tuesday of each month at 12:00 p.m. EDT, but emergency amendments occur without advance notice. General License 134B was issued on a Wednesday with no notice cycle. Third, immediately after transaction completion, download and archive a PDF copy of the license as it appeared on your transaction date. OFAC’s website retroactively updates license pages when amendments occur, often without preserving prior versions. If OFAC later challenges your transaction, you must prove the license language as it existed on your transaction date, not as it reads years later during enforcement investigation.
OFAC’s license search tool also provides Frequently Asked Questions that interpret license scope. For example, FAQ 1027 under the Iran Sanctions Program clarifies that General License U does not extend to contingent contracts signed after the license effective date, even if cargo loading occurs before the cutoff. These FAQs carry interpretive weight in enforcement proceedings, though they are not binding regulations.
Transactions crossing multiple jurisdictions require cross-referencing OFAC licenses with EU, UK, and Canadian sanctions programs. The EU’s Russia sanctions under Council Regulation 833/2014 include an oil price cap mechanism aligned with the G7 framework but with independent legal text and enforcement authority through member state competent authorities. Compliance with OFAC is not automatic compliance with EU sanctions. Separate legal analysis is required for each jurisdiction.
Advanced compliance programs implement automated license monitoring through API integrations with OFAC’s sanctions list data feeds, generating daily alerts when designated persons are added to the SDN List or when general licenses are amended. Manual monitoring cannot match the speed required in cargo trading, where counterparties may be designated while vessels are mid-voyage.
What Penalties Apply If a Company Operates Without or Outside an OFAC Tanker License?
Operating without proper OFAC authorization triggers both civil and criminal liability under IEEPA, the Trading with the Enemy Act (Cuba sanctions), and the Syria Accountability and Lebanese Sovereignty Restoration Act. The penalty structure depends on whether OFAC determines the violation was non-egregious or egregious, and whether the violator voluntarily disclosed.
Civil penalties for non-egregious violations—those involving negligence or compliance system failures without reckless disregard—reach up to the greater of twice the transaction value or the statutory maximum. As of 2026, the IEEPA statutory maximum stands at $356,579 per violation. OFAC treats each shipment, payment, and document as a separate violation. A single unauthorized cargo transaction typically generates 5 to 15 distinct violations spanning the purchase contract, charter party, insurance certificate, bills of lading, and payment instructions. One unlicensed cargo can cost $1.8 million to $5.3 million in civil penalties alone.
Egregious violations—defined as those involving willful or reckless conduct, senior management involvement, or repeat violations after prior penalties—result in penalties at or near the statutory maximum multiplied by the number of violations. OFAC’s largest oil-sector settlement as of 2026 involved a European shipping company that transported Venezuelan crude without authorization over 18 months; the $82 million penalty represented the statutory maximum multiplied by 230 separate violations. Criminal violations can result in imprisonment up to 20 years and fines exceeding $1 million per count.
When OFAC and the Department of Justice find violations were willful, criminal penalties follow. Willfulness doesn’t require specific intent to break the law—reckless disregard of legal obligations or deliberate ignorance of red flags qualifies. Corporate entities face fines up to $1 million; individual officers and employees face up to 20 years imprisonment under 50 U.S.C. § 1705(c). As of June 2026, the DOJ has announced 11 criminal indictments tied to sanctions-evading oil transactions. Five resulted in convictions with prison sentences ranging from 27 months to 8 years. That’s meaningful time.
Secondary sanctions work differently. A foreign company with zero U.S. operations can still land on OFAC’s SDN List if it engages in significant transactions with blocked persons or operates in sanctioned sectors. Once designated, access to the U.S. financial system disappears. The company cannot transact with U.S. persons, and any assets on U.S. soil freeze. Here’s the practical problem: international banks maintain U.S. correspondent accounts to clear dollars. When a company gets designated, those banks terminate the relationship immediately to protect their own dollar access—even if the designated entity has no direct U.S. footprint.
Beyond fines and asset freezes, violations create cascading collateral damage. Companies get debarred from U.S. government contracts under Federal Acquisition Regulation suspension and debarment rules. Export privileges may be revoked by the Bureau of Industry and Security. SEC-registered companies must disclose sanctions investigations in 10-K and 10-Q filings. Stock price declines often follow. Credit rating agencies downgrade debt ratings. Directors and officers liability insurers decline renewal. The reputational and operational fallout extends far beyond the fine itself.
Early voluntary disclosure is the strongest penalty mitigation lever available. OFAC’s 2024 Enforcement Guidelines guarantee a 50% base penalty reduction for timely voluntary disclosures made before OFAC discovers the violation independently. Add a thorough internal investigation, full remedial measures, and cooperation with OFAC’s inquiry—penalties can drop by up to 75%. For violations meeting OFAC’s non-egregious standard, voluntary disclosure may result in nothing but a cautionary letter. No fine at all.
FAQ
What is the OFAC General License list and where can companies access current authorizations?
The OFAC General License list consolidates all active general licenses issued by the U.S. Department of the Treasury’s Office of Foreign Assets Control, organized by sanctions program. Companies can access it at ofac.treasury.gov under "Sanctions Programs," with separate lists for Iran, Russia, Venezuela, Cuba, North Korea, Syria, and other designated countries and thematic programs. Each entry includes the license number, effective date, expiration date if applicable, full license text, and any amendments. OFAC maintains an archive of expired and revoked licenses for reference. One critical practice: download and preserve PDF copies of applicable licenses exactly as they appeared on the transaction date. OFAC retroactively updates web pages when amendments occur, so a license you viewed last month may look different today—but your transaction history needs the version that was actually in effect when you acted.
How do companies conduct an effective OFAC license search before oil transactions?
Effective license searches require three steps before any crude purchase or vessel charter. First, check the General License repository at ofac.treasury.gov to identify whether a general license covers the transaction. Second, screen all counterparties and vessels against the Specially Designated Nationals List and Consolidated Sanctions List using OFAC’s search tool. Third, review program-specific FAQs—FAQ guidance clarifies ambiguities that license text alone leaves open. The timing matters. Search 48 hours before cargo loading, then again immediately before the vessel approaches the terminal, because designations and license amendments can occur without warning. Document everything: screenshots, timestamps, analyst approvals. This evidence demonstrates due diligence if OFAC audits the transaction later.
What is OFAC General License 128 and does it apply to oil sector transactions?
General License 128 and its successor, General License 128B, were issued under Ukraine-related sanctions and authorized agricultural commodities and related services with designated Russian entities. Oil and petroleum products? Not covered. Crude oil transactions involving Russia fall under the price cap mechanism (31 CFR 515.582) and specific general licenses such as the now-expired General License 134B, which authorized cargo completion for loads taken before April 17, 2026. Companies mistakenly using GL 128 for oil transactions invite enforcement action. OFAC interprets licenses narrowly; authority does not extend by implication to transaction types not expressly listed.
What is OFAC General License 46 and how does it differ from General License 47?
General License 46 authorizes certain transactions ordinarily incident and necessary to Venezuelan petroleum operations by established U.S. entities. This covers lifting, sale, storage, marketing, purchase, delivery, transportation, export, reexport, and refining of Venezuelan crude oil and petroleum products. It applies to U.S. companies and their foreign subsidiaries with existing Venezuela operations. General License 47, separate and distinct, authorizes the sale and exportation of U.S.-origin diluents to Venezuela—a critical input for moving extra-heavy crude. A company may operate under GL 46 for crude transactions and GL 47 for diluent exports simultaneously, but each license carries independent terms, conditions, and reporting requirements that must be satisfied separately.
What is the OFAC Sanctions List and how often is it updated with new tanker or oil company designations?
The OFAC Sanctions List is actually multiple lists: the Specially Designated Nationals and Blocked Persons List (SDN List), the Sectoral Sanctions Identifications List, the List of Foreign Sanctions Evaders, and program-specific lists such as the Non-SDN Iran Sanctions Act List. As of June 2026, the SDN List contains over 10,000 individuals, entities, vessels, and aircraft. Oil-sector targets include the National Iranian Tanker Company, 27 NITC-operated vessels, 145 Russian shadow fleet tankers, and numerous front companies in the UAE, Hong Kong, and Singapore. OFAC updates continuously, often without advance notice—typically two to four designation actions per week. Weekly or monthly batch screening misses designations. Companies must implement daily automated screening to catch a counterparty cleared on Monday who gets designated on Tuesday while cargo is loading.
What is OFAC General License 128B and did it replace earlier authorizations?
General License 128B replaced General License 128 under Russia-related sanctions and expanded authorized agricultural transactions with designated Russian entities. It excludes oil-sector transactions. The "B" suffix indicates an amended or superseded version. When OFAC issues successor licenses, the prior version becomes void immediately unless the successor includes transition provisions. Relying on outdated versions triggers enforcement action even if the company was unaware of the amendment. Example: March 2025 saw OFAC revoke General License 8A (authorizing certain Russian energy-sector transactions) and replace it with 8B. Companies that continued operating under 8A terms after 8B’s effective date received warning letters and fines.
What is the OFAC General License Lukoil and does it authorize transactions with Russian oil companies?
No general license exists titled "OFAC General License Lukoil." PJSC Lukoil, one of Russia’s largest oil companies, is not currently designated on the SDN List as of June 2026, but it falls under sectoral sanctions under Directive 4 of Executive Order 13662, which restricts certain new debt and equity dealings. Lukoil petroleum exports are governed by the price cap mechanism under 31 CFR 515.582, not specific general licenses. Companies may purchase Lukoil crude and refined products provided the price stays below the applicable cap and all maritime service providers comply with price attestation requirements. No OFAC general license overrides the price cap. Entities seeking authorization above the cap must apply for a specific license.
