The U.S. government is exploring an unusual legal route for dealing with Iranian oil and ships captured as part of its blockade: reviving a wartime maritime system that has barely been used for generations, according to Bloomberg.

The Justice Department, working with the Pentagon, is preparing to invoke prize law, a legal mechanism that historically allowed courts to decide whether vessels and cargo captured during armed conflict could lawfully become property of the United States. Prize law was once commonplace in naval warfare, with prize courts active in U.S. conflicts such as the War of 1812 and the Civil War, but it largely disappeared from American practice after the 19th century and has been dormant since World War II.

The administration's appeal to the approach is largely practical. At present, the government generally relies on civil forfeiture to take ownership of vessels accused of sanctions violations or other offenses. Such cases can become complicated and slow, particularly when shipping companies, creditors, terrorism victims, or other parties assert competing rights to a ship or its cargo. A prize proceeding could potentially narrow those disputes and allow captured oil to be sold more quickly, with the proceeds going to the U.S. Treasury.

Bloomberg reports that Houston is being considered as a central venue for these cases. The Southern District of Texas has jurisdiction over a major port and sits alongside the country's largest concentration of petrochemical infrastructure, giving it the capacity to receive and store substantial quantities of crude. U.S. Attorney Aaron Reitz, whose office is working with DOJ officials in Washington, said the department is "now reviving" prize courts, describing the concept as an "ancient body of maritime law."

The effort comes as Washington looks for additional ways to put economic pressure on Iran. Oil exports are a critical source of revenue for Tehran, and the country has long relied on a fleet of tankers — many operating under obscured ownership — to move crude to buyers despite sanctions. U.S. forces have already intercepted Iranian-owned or Iran-linked vessels since the blockade was imposed in April. Using prize law could turn those captures into a more direct financial tool: ships and oil deemed lawful prizes could be liquidated, potentially generating revenue while depriving Iran of valuable exports.

Supporters also see a strategic purpose beyond the money. Reviving the system would reinforce the message that the United States considers the blockade a serious wartime measure rather than simply another sanctions regime. It could also make it more difficult for neutral commercial vessels to continue transporting goods that Washington believes support Iran, raising the stakes for shippers and insurers involved in the region's trade.

However, there is considerable uncertainty over how a centuries-old framework would operate under modern international law. "This really is a historical area of law that is not tested in modern times," maritime attorney Allison Luzwick said. Courts could be asked to determine whether the current conflict provides sufficient legal grounds for invoking prize authority at all, particularly given questions surrounding congressional authorization for the hostilities. Modern conventions governing armed conflict at sea, developed largely in the 20th century, did not anticipate a U.S. revival of prize proceedings.

The practical challenges are significant as well. Federal judges, prosecutors, and the Navy have virtually no contemporary experience administering prize cases, meaning procedures would effectively have to be rebuilt for modern shipping and warfare. Shipowners and other parties with financial claims are also expected to contest seizures.

There are broader geopolitical risks, too. Critics argue that normalizing prize law could create a precedent that Washington may later regret. A rival power such as China, for example, could point to U.S. practice when attempting to seize American or neutral merchant vessels during a future conflict — a scenario that becomes more consequential as commercial shipping routes grow increasingly contested.

What happens next will largely depend on the courts. If a prize case is filed, likely in Houston, early rulings on whether the blockade qualifies as an armed conflict sufficient to trigger prize authority — and on the role of Congress — will shape whether the mechanism becomes a durable part of U.S. enforcement or remains a brief historical footnote.

Source: OilPrice.com / Zerohedge.com