Strait of Hormuz: Sanctions Considerations

Recent developments in and around the Strait of Hormuz continue to present acute navigational and security risks for vessels transiting one of the world’s most strategically significant maritime chokepoints. Alongside these physical threats, shipowners and operators also face a heightened and increasingly complex legal risk profile, particularly in relation to international sanctions compliance.

Iran’s announcement of a new transit regime under the so‑called Persian Gulf Strait Authority, including reported demands for advance authorisation and payments linked to “safe passage”, introduces material sanctions exposure under U.S., EU and UK law. These issues arise irrespective of whether a vessel is physically able to transit the strait safely and can have direct implications for financing, insurance, claims handling and Club cover. Members are therefore urged to consider the legal and sanctions consequences of any engagement with Iranian authorities in parallel with the evolving security situation, especially considering the recent OFAC FAQ 1249.

Persian Gulf Strait Authority and Transit Requirements

Reports suggest that Iran has purported to instruct vessels that may be considering transiting the Strait of Hormuz to submit advance information using a prescribed “PGSA Application Form” and seek authorisation for passage. There are indications that vessel operators may be asked to provide extensive details covering ownership, management, insurance, cargo, crew and intended voyage, potentially as a condition of transit approval. It is important to highlight that the authenticity of any individual correspondence cannot be readily verified, nor can safe passage be assured.  

The purported mechanism for coordinating safe passage through the Strait is alleged to include demands for payment of a “toll”, described as an administrative fee or transit charge. Any toll payments – directly or indirectly - are likely to give rise to serious sanctions concerns.  

U.S. Sanctions – OFAC FAQ 1249

On 28 April 2026, prior to Iran’s announcement, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued FAQ 1249, providing important clarification on the sanctions risks associated with any payments, whether direct or indirect, to the Government of Iran or the Islamic Revolutionary Guard Corps (IRGC) for safe passage through the Strait of Hormuz.

OFAC confirmed unequivocally that U.S. sanction law prohibits any payments to the Government of Iran or the Islamic Revolutionary Guard Corps (IRGC) by U.S. persons, including U.S. financial institutions, or for U.S.-owned or -controlled foreign entities. OFAC further made clear that the sanctions exposure also extends to non-U.S. persons.  

The IRGC is designated under multiple U.S. sanctions regimes, including counter‑terrorism authorities, and is also designated by the EU. Whilst not specifically proscribed as a terrorist organisation by the UK Authorities, the IRGC are subject to significant UK sanctions and restrictions. Although the status and operational framework of the PGSA remains unclear, any payment of a toll to the PGSA may constitute an indirect payment to the Government of Iran and/or the IRGC.  

Members should note that the guidance is not limited to formal “toll” payments. Any transaction, facilitation or payment mechanism that results in value being conferred on sanctioned Iranian entities, or for the benefit of the Government of Iran and/or the IRGC in connection with transit may give rise to U.S. sanctions risk.

The full OFAC FAQ is available here: 1249 | Office of Foreign Assets Control

New Sanctions over Iran’s oil shipments to China

Reflecting the heightened sanctions focus on parties considered to be assisting the Iranian regime, whether directly or indirectly, on 11th May OFAC designated 3 individuals and 9 entities said to have enabled the Islamic Revolutionary Guard Corps’ (IRGC) sale and shipment of Iranian oil to the People’s Republic of China.  

Economic Fury Ramps Up Pressure on Iran’s Islamic Revolutionary Guard Corps Oil

Operations | U.S. Department of the Treasury

EU and UK Sanctions Exposure

While the OFAC guidance is issued under U.S. law, as highlighted above similar concerns arise under EU and UK sanctions regimes, which impose wide‑ranging restrictions on financial transactions, economic resources, and dealings with designated Iranian entities and individuals.

Depending on structure and counterparties, payments or cooperation with Iranian governmental bodies or IRGC‑linked entities in connection with transit could expose Members, charterers, managers, financiers or insurers to UK and EU sanctions risk, including asset‑freeze and anti‑circumvention provisions. Members should also be wary of the potential for secondary sanctions or enforcement risk where transactions touch the U.S. financial system.

Club Cover

Under Rule 47 (Owner’s Rules) and Rule 42 (Charterer’s Rules), Club cover shall cease from the date that insurance or ownership, management, operation, charter and/or employment becomes prohibited, unlawful or sanctionable, or might cease if the risk thereof arises. The making of payments or taking of any action which might expose the Club, or its Members to the risk of sanctions or restrictive measures imposed by the United Nations, European Union, United Kingdom, United States, or other relevant authorities may therefore have significant adverse consequences to the availability of Club cover.

Steamship Mutual continues to monitor developments closely and will provide further updates as appropriate. Members with specific questions or concerns on this issue are encouraged to contact the Club via [email protected].