VI Energy Politics & Supply Security
General license (OFAC)
An authorisation from OFAC, the US Treasury's sanctions office, that permits an otherwise prohibited type of transaction for anyone meeting its terms, with no application needed.
How it works
OFAC is the Treasury unit that administers US economic sanctions. According to the agency's own FAQ page, general licenses are self-executing: any person or company that meets the conditions in the text can carry out the transaction without a separate application.
A specific license, by contrast, is granted case by case on application and covers only the named licensee. A general license does not lift a sanction; it carves a particular type of transaction out of it for a set period and under set conditions. The text usually spells out the scope, the expiry date and the transactions that remain prohibited.
The measurement trap is to assume a licence brings goods to market. A licence only opens the legal door. Supply depends on the producer's own export restrictions, on whether buyers will take on the legal risk, and on whether other legal bans remain in force. The first price reaction to licence news is therefore often a pricing of expectations that runs ahead of physical flows.
Why it matters here
Sanctions regimes are now used like a valve that opens and closes. A general license can move product prices within hours without any change in output: the licence for Russian diesel cut European gasoil by 3.44% in a single day. In energy and macro scenarios, a licence's scope, duration and the laws it may conflict with should therefore be read as a separate trigger.