US Sanctions Iran’s Persian Gulf Strait Authority on Hormuz

The United States has added Iran’s newly established Persian Gulf Strait Authority (PGSA) to its sanctions list, directly targeting Tehran’s regime for collecting tolls from vessels transiting the Strait of Hormuz — one of the world’s most critical energy chokepoints. The move, announced on May 27 by the Treasury Department’s Office of Foreign Assets Control (OFAC), represents a significant escalation in the US maximum pressure campaign against Iran amid the ongoing 2026 Strait of Hormuz crisis.

Background: The Strait of Hormuz Crisis

The Strait of Hormuz, a narrow waterway between Iran and Oman, carries approximately one-fifth of the global oil supply — about 20 million barrels per day. The current crisis began on February 28, 2026, when the United States and Israel launched military operations against Iran. In response, Iran closed the strait to normal commercial traffic, effectively weaponizing the waterway and driving global energy prices higher.

In March 2026, Iran declared that vessels would be required to pay for safe passage through the strait to avoid sea mines and confrontations with Iranian military vessels. To formalize this arrangement, Iran established the Persian Gulf Strait Authority on May 5, 2026, and officially announced it on May 18, as reported by Xinhua News. The PGSA, headquartered in Tehran, was created as a centralized mechanism for authorizing and regulating maritime transit in coordination with the Islamic Revolutionary Guard Corps (IRGC).

The Sanctions Designation

OFAC added the PGSA to its Specially Designated Nationals (SDN) List under counterterrorism sanctions authorities, specifically Executive Order 13224 as amended by Executive Order 13886. The official OFAC designation states that the PGSA is “Linked To: ISLAMIC REVOLUTIONARY GUARD CORPS” — a designated terrorist organization by the US. The designation carries secondary sanctions risk under Section 1(b) of E.O. 13224, meaning non-US persons and entities engaging with the PGSA also risk sanctions exposure.

Treasury Secretary Scott Bessent said the action “targets Iran’s Hormuz toll regime” and that “maximum pressure on Tehran continues,” according to investingLive.

Legal and International Context

Under Article 34 of the United Nations Convention on the Law of the Sea (UNCLOS), the regime of waters forming a strait used for international navigation does not affect the right of transit passage, which coastal states may neither suspend nor condition on prior authorization. As noted by Wikipedia, legal experts have concluded that Iran’s claims to authority over the strait and its toll regime have no recognized legal basis under international law.

Industry analysts have warned that compliance with the PGSA permit process, where it involves transit payments, could itself trigger sanctions exposure for shipping companies. Richard Meade of Lloyd’s Intelligence told CNN that the new system appeared designed to “formalize” Iranian authority over transits through the strait.

Broader Maximum Pressure Campaign

The sanctions on the PGSA are part of a broader US strategy operating across financial, diplomatic, and military tracks. Earlier on May 27, US forces struck a site near Bandar Abbas and intercepted Iranian drones, though accounts from the two sides contradicted each other. The Jerusalem Post reported that the designation was made under counterterrorism authorities and highlighted the IRGC connection.

Iran’s parliament has restated Tehran’s four non-negotiable red lines — including authority over the strait — as unchanged, suggesting no imminent diplomatic resolution. Meanwhile, China has legislated a counter-sanctions regime that may impact US sanctions, with Chinese Foreign Minister Wang Yi expressing hope that Iran and the US could meet halfway in negotiations.

Implications for Global Markets and Shipping

The sanctions carry far-reaching consequences for the global energy market and shipping industry:

• Energy Markets: By sanctioning the administrative body that processes Hormuz passage requests, the US has reinforced that it will not legitimize Iranian control over the chokepoint, keeping the transit risk premium intact and oil prices elevated.
• Shipping Industry: Shipping companies, insurers, and flag states now face a legal minefield — complying with Iranian passage requirements risks US sanctions, while ignoring them risks Iranian military action in the strait.
• Inflation Risk: Central banks globally, including the Federal Reserve, European Central Bank, and Bank of Korea, have identified the oil supply disruption as a significant inflation risk.

What’s Next

The effectiveness of the sanctions remains uncertain. The PGSA has no official recognition internationally, and its operations may be difficult to track. However, the designation raises the legal and operational risk for any entity that engages with the authority, potentially chilling even nominal compliance with Iranian passage requirements.

With Iran’s red lines unchanged and the US maintaining maximum pressure across multiple fronts, the Strait of Hormuz — and the global energy supplies that depend on it — remains at the center of one of the most consequential geopolitical standoffs in decades.