US-Iran MOU Reopens Strait of Hormuz but Iran's Mandatory Insurance Rule Sparks Sanctions Standoff

The reopening of the Strait of Hormuz — one of the world's most critical energy chokepoints — has triggered an unprecedented insurance and sanctions dilemma for the global shipping and marine insurance industry. Following the signing of a US-Iran memorandum of understanding (MOU) on June 17, 2026, which guarantees toll-free passage through the strait for 60 days and establishes a framework for negotiations, commercial traffic has cautiously begun resuming after a closure that began in late February 2026.

However, two days after the MOU was signed, Iran circulated a terms-and-conditions document to the shipping industry through its newly created Persian Gulf Strait Authority (PGSA). The document requires all transiting vessels to carry insurance approved by the PGSA and to follow a prescribed route. During the 60-day MOU window, this insurance is being provided free of charge — but the PGSA has explicitly reserved the right to introduce insurance fees after the window expires around August 17, 2026.

The complication is severe: the PGSA was designated by the US Office of Foreign Assets Control (OFAC) on May 27, 2026, as an entity linked to Iran's Islamic Revolutionary Guard Corps (IRGC). This means that once the PGSA begins charging insurance fees, any shipowner, P&I club, or bank with US dollar clearing relationships that pays the PGSA would be conducting a prohibited transaction with a sanctioned terrorist-linked entity under US law. Marine underwriters pricing Hormuz coverage renewals for August and September are not pricing a resolved situation — they are pricing what the strait looks like on day 61.

The Joint War Committee of the Lloyd's Market Association had previously expanded its high-risk designation to cover the entire Persian Gulf, and major maritime insurers suspended or repriced war-risk coverage during the conflict. Hull war insurance prices for the Gulf were around 0.25% of a ship's value before the fighting; they spiked dramatically and became nearly impossible to obtain at the height of the crisis. India's Bharat Maritime Insurance Pool (BMIP), launched during the conflict, reviews war-risk rates weekly, and market participants expect rates to ease further as transit normalizes. Sea mines from the conflict also remain in the strait, with Iran given 30 days under the MOU to remove them.