Iran's Non-Compliant Vessels List: The Strait of Hormuz Trap With No Clean Exit

On Sunday August 23, the Persian Gulf Strait Authority published its first Non-Compliant Vessels list. Announced through the body's X account and hosted on its website, the list names vessels Iran says have violated its arrangements for transiting the Strait of Hormuz and warns that they face restrictions on future passages including fines, detention, seizure, or confiscation.

Shipping companies, the statement said, must review the list before chartering in order to avoid potential issues.

The list runs to 45 or 46 vessels depending on which count you take, and it will be updated. What makes it worth analyzing rather than simply reporting is that it converts the permit regime we covered in May into a published register, and in doing so it creates a genuine squeeze. Complying to stay off the list means transacting with a sanctioned Iranian body. Not complying means being named. Applying to get off it means doing the first thing in order to undo the second.

There is no version of this that leaves an operator clean, and understanding why is the useful part.

What Is On the List

The composition tells you what the instrument is actually for.

It includes vessels operated by the Abu Dhabi National Oil Company, AD Ports Group, Saudi Arabia's Bahri, and Qatar's Nakilat. Those are the national energy shipping arms of Iran's Gulf neighbors. It also reaches major international owners including South Korea's Sinokor.

More striking is the presence of vessels that have themselves been attacked. The Minoan Dignity, IMO 9294484, was struck while outbound through the Strait on August 18, sustaining engine room damage and a crew casualty. Al Bahyah, IMO 9937799, and Mombasa B, IMO 9739501, were both attacked in Omani waters in July. All three appear on the non-compliant list.

A regime that names as violators the vessels it has damaged is not operating as a regulatory system. It is operating as a coercive one, and operators should read it that way when assessing what compliance would actually buy them.

Martin Kelly, Head of Advisory at EOS Risk Group, characterized the designation as adding another layer of risk for companies trading through the Gulf, which is accurate and understated.

The Contagion Clause

The provision that matters most is not the penalty schedule. It is the extension.

Any vessel cooperating with a listed vessel, including through ship-to-ship transfer or transshipment, will be added to the list with immediate effect. The threat is extended to companies as well as ships working with blacklisted vessels.

The target of that provision is obvious. Since February, risk-averse operators have avoided the Strait and the Persian Gulf by building workarounds. Shuttle operations inside the Gulf feeding transfers outside it. STS transfers in Omani and Gulf of Oman waters. Transshipment arrangements that keep the deep-sea tonnage clear of the chokepoint entirely.

The contagion clause is designed to make those workarounds unusable, by ensuring that anyone who touches a listed vessel becomes listed themselves.

The practical consequence for operators is immediate. NCV status is now a screening item. If you conduct an STS with a counterparty vessel that is on the list, you go on the list. That is a data point that has to sit alongside OFAC, EU, and UK screening in your pre-fixture checks, notwithstanding that the list has no legal validity anywhere outside Iran.

Comply and You Have an OFAC Problem

Here is the first half of the squeeze.

Staying compliant with PGSA arrangements means engaging with the permit regime. Applying to the Authority, submitting the Vessel Information Declaration covering ownership, insurance, crew, cargo, and routing. Potentially paying transit fees.

We covered the sanctions position on this in May and it has not changed. OFAC published FAQ 1249 on April 28, warning that toll payments to the Government of Iran or the IRGC for passage through the Strait are not authorized and are subject to U.S. sanctions restrictions. The May 1 alert extended that to the full range of payment structures, expressly including fiat currency, digital assets, offsets, informal swaps, and in-kind payments such as nominally charitable donations.

For U.S. persons the prohibition is absolute and there is no general license. For non-U.S. persons, OFAC flagged significant secondary sanctions exposure arising from transactions involving the Government of Iran, including under Executive Order 13902, which authorizes designation of foreign persons engaged in significant transactions involving determined sectors of the Iranian economy.

Providing the Vessel Information Declaration is itself a transaction with an Iranian government body and, for U.S. persons, potentially the provision of services to Iran under the Iranian Transactions and Sanctions Regulations. It also hands the Iranian state a detailed picture of your ownership structure, insurance arrangements, cargo, and routing, which has value to the recipient beyond the individual transit permit.

Don't Comply and You Have an Iran Problem

The other half is equally real, and the fact that the PGSA has no legal authority does not soften it.

As we set out in our piece on the sovereignty question, transit passage under the UNCLOS framework cannot be suspended by a bordering state, and the right of passage must not be subjected to discriminatory considerations. A list that names vessels by owner and nationality, threatens penalties for future transits, and extends liability to commercial counterparties is discriminatory on its face and unsupportable under the transit passage regime the United States and most maritime states recognize.

None of which prevents enforcement. Iran detained a UAE-owned, Liberia-flagged tanker of 76,801 dwt on August 18 for failing to comply with the transit regime. Vessels have been struck. Traffic through the Strait has fallen to roughly five visible commodity vessels per day.

Legal invalidity and operational reality are running in opposite directions, and a master approaching the Strait has to deal with the second.

The Removal Application Is Not a Neutral Act

The PGSA has provided an exit. Listed vessels may submit a formal application with justifications to the Authority by email, and request review. For an operator whose vessel has been named, that will look like the obvious step, but it should be approached carefully.

Submitting an application is a direct communication with, and a request for a determination from, an Iranian state body. It involves providing explanations and supporting material. Depending on what is submitted and what follows, it may involve undertakings about future conduct.

Whether that constitutes a prohibited transaction or the provision of services, and whether it creates secondary sanctions exposure for a non-U.S. operator, are questions that require sanctions counsel before anything is sent. They are not questions to answer by analogy to how you would handle a port state detention.

The uncomfortable structure is that the mechanism Iran has provided for clearing your name is itself the conduct that creates exposure on the other side.

The Insurance Dimension

Two points that operators are unlikely to have worked through.

Detention is a war risk peril, with a waiting period. Capture, seizure, arrest, restraint, and detainment are covered under war risk hull policies, and detention by a state authority ordinarily falls within that. But cover typically responds as a total loss only after a specified period of continuous detention, commonly six or twelve months. A vessel seized under the NCV regime is not an immediate claim. It is an asset out of service while the clock runs.

Complying may compromise the cover that would respond. Every war risk and P&I placement carries sanctions exclusion language, and those clauses operate to void cover where the insured has engaged in sanctionable conduct. An operator who pays a fee or submits a declaration to the PGSA in order to secure passage may have created exactly the exposure that engages the exclusion.

That produces the sharpest version of the trap. The step taken to protect the vessel from Iranian action may remove the cover that would have responded to it.

Anyone considering engagement with the PGSA regime should have that conversation with their war risk underwriter and their P&I club before, rather than after.

What Operators Can Actually Do

Add NCV status to your screening. The list has no legal standing outside Iran and it is now an operational fact. Check it before fixing, and check it for STS and transshipment counterparties, because the contagion clause means their status becomes yours.

Do not assume victim status protects you. Three vessels that were attacked appear on the list. There is no evident logic connecting listing to conduct, which means there is no conduct that reliably keeps you off it.

Take sanctions advice before any communication with the PGSA. That includes permit applications, declarations, and removal requests. Written advice, before anything is sent, from counsel who practices in this area.

Read your sanctions exclusion clauses now. Both war risk and P&I. Understand what conduct engages them and what the notification obligations are.

Understand your detention position. Waiting periods, notification requirements, and whether loss of hire or war risk delay cover responds during the period before a constructive total loss can be claimed.

Get the charter party allocation right. Who decides whether the vessel transits. Who bears the cost of delay, deviation, or listing. Whether CONWARTIME or VOYWAR is incorporated and what it entitles the master to refuse. These questions have answers in your contracts and most operators have not looked.

Consider that the answer may be to stay out. Traffic at five vessels per day says the market has largely already reached this conclusion. Avoiding the Strait is expensive and it is the only course that does not require choosing between two regulators who both claim authority over the same water.

The Bottom Line

Iran has built a regulatory apparatus for a strait it does not have the legal authority to regulate, published a blacklist that includes vessels its own forces have attacked, and extended liability to any commercial party who deals with a listed ship.

The United States has made clear that engaging with that apparatus carries sanctions consequences for U.S. persons and secondary sanctions exposure for everyone else.

Between those two positions there is no compliant path, only a choice about which exposure to accept, and that choice belongs at board level with sanctions advice rather than with an operations department trying to keep a fixture on schedule.

For most operators the honest conclusion is that a chokepoint with two competing enforcement authorities, neither of which will indemnify you against the other, is a trade to sit out until the position resolves.