US sanctions target Iran’s Hormuz transit authority

• PGSA on US Treasury blacklist
• Secondary sanctions for shipowners
• Iranian tolls ‘operational reality’

Commercial vessels transiting the Strait of Hormuz using the Iranian-linked Persian Gulf Strait Authority (PGSA) now face US sanctions after Washington added the body to the Treasury Department’s blacklist.

The move by the US Office of Foreign Assets Control (OFAC) exposes non-US shipowners, insurers and banks to secondary sanctions if they use the authority or facilitate payments linked to it, according to Jeffrey Orenstein, a Washington-based partner at Squire Patton Boggs.

“The designation of the PGSA to the Specially Designated Nationals and Blocked Persons List [SDN], following OFAC’s May 1 alert warning against payments linked to Iranian-controlled transit arrangements in the Strait of Hormuz, is intended to deter vessel owners and financial institutions from paying ‘tolls’ through the threat of secondary sanctions,” Orenstein told AGBI.

The May 1 alert warned shipping companies, insurers and financial institutions that payments connected to Iranian-controlled transit arrangements in the strait could expose them to sanctions. OFAC said the warning applied not only to direct payments but also to indirect methods including digital assets, barter arrangements, offsets, informal swaps and in-kind transfers.

Individuals and entities placed on the SDN list are effectively cut off from the US financial system, while non-US parties dealing with them can also face secondary sanctions.

“Rather than pay tolls that ultimately flow to the Islamic Revolutionary Guard Corps [IRGC], the Trump administration expects commercial vessels to work with the US military to gain safe passage through the Strait,” Orenstein said.

Attempt to dismantle ‘toll booth’

The designation, announced by OFAC on May 27, marks Washington’s clearest attempt to dismantle the parallel Iranian-administered “toll-booth” system that emerged in March, under which some vessels sought passage approvals through Tehran-linked channels to cross the waterway.

US Treasury Secretary Scott Bessent said: “The Iranian military’s latest attempt to extort global maritime trade is proof that Operation Economic Fury has left the regime desperate for cash.”

The Treasury Department said the PGSA generated revenue for the IRGC and warned that parties cooperating with the authority could be exposed to sanctions risk.

Reacting to OFAC’s May 1 warning, law firm DAC Beachcroft, which has headquarters in the the UK, said in a May 26 client alert that sanctions risks arise “irrespective of the method of payment”.

DAC Beachcroft said any form of toll or facilitation payment designed to secure transit through Hormuz was likely to fall within the scope of US sanctions unless specifically authorised or exempt.

It said non-US parties were also exposed through secondary sanctions, warning that foreign financial institutions involved in such transactions risked restrictions or loss of access to the US financial system. DAC Beachcroft added that companies could face liability if their actions caused US insurers, reinsurers or banks to breach sanctions rules.

The sanctions escalation comes weeks after shipping executives and maritime analysts acknowledged that an Iranian-run framework for regulating Hormuz transits was becoming an operational reality for parts of the commercial shipping market, despite Western governments rejecting any legal basis for toll payments through an international strait.

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Iran has repeatedly denied accusations that it is charging unlawful transit fees, instead framing the arrangements as security-related coordination measures introduced during the conflict.

Discussions between Washington and Tehran over a broader agreement remain ongoing, with proposals under discussion including restoring unrestricted passage through the Strait of Hormuz and requiring Iran to remove sea mines from the waterway within 30 days, the BBC reported.

The broadcaster reported on Thursday that US and Iranian negotiators had agreed a framework for a potential deal that would extend the ceasefire by 60 days and open talks on the future of Iran’s nuclear programme.

However, US Vice-President JD Vance cautioned several sticking points remained unresolved. Iranian media have also said no final agreement had yet been confirmed.

Tens of thousands of seafarers remain trapped in Hormuz since hostilities began on February 28. The International Maritime Organization has identified about 800 vessels that could participate in an evacuation framework once security guarantees are in place.