On Thursday 28 May, the US Treasury's Office of Foreign Assets Control (OFAC, the bureau that runs American sanctions and keeps the Specially Designated Nationals list) put Iran's Persian Gulf Strait Authority (PGSA, the toll body Tehran stood up on 5 May) on that list under Executive Order 13224, the post-9/11 counterterrorism authority1. The same day, US and Iranian negotiators reached a tentative 60-day memorandum of understanding (MOU, a non-binding statement of agreed terms) that would reopen the Strait of Hormuz, the chokepoint for roughly 20% of the world's oil, to shipping "unrestricted, no tolls, no harassment"2. The PGSA is the body that levied tolls of up to $2 million per transit and whose Hormuz controlled-zone coordinates Iran published on 20 May.
OFAC's designation took legal effect the moment Treasury published it on 28 May, while the MOU carried no legal force at all: President Donald Trump received the final-deal briefing and declined to sign, asking for "a few days to think about it"3, while Vice-President JD Vance called the talks "still TBD" on "a couple of language points"4. Iran's Tasnim news agency called any Western claim of finalisation "not valid"5, and Mojtaba Khamenei, Iran's Supreme Leader, has not approved the text6. The MOU itself reflected the Phase 2 sequencing Iran's state broadcaster aired on 27 May, deferring the disposal of its Highly Enriched Uranium (HEU, material refined close to weapons grade) to the first 60-day negotiation. Trump had narrowed that path a day earlier when he rejected both Russia and China as custodians for Iran's stockpile and told negotiators not to rush.
OFAC's order and the MOU collide on one mechanism. The reported MOU promises toll-free passage, yet the PGSA would still coordinate that passage, and the deal text as described carries no clause de-listing it. Any vessel using a reopened strait under PGSA coordination would be transacting with a sanctioned counterparty, so the foreign banks that finance the charter risk secondary sanctions7. Treasury Secretary Scott Bessent framed the designation as a strike at extortion: "The Iranian military's latest attempt to extort global maritime trade is proof that Economic Fury has left the regime desperate for cash"8. EO 13224 designations unwind slowly and case by case; the MOU sets a 30-day clock for Iran to clear sea mines but no parallel clock to lift the sanction, so the commercial and legal timelines are mismatched from signature.
The designation may be pre-signature leverage rather than contradiction, maximum pressure held until the ink dries. Either way, unless OFAC de-lists the PGSA or issues a carve-out general licence, the reopened-Hormuz terms are unworkable from the first vessel, with the 1 June War Powers Resolution wind-down due to lapse uncontested days later as the House stays in recess until 2 June.
