how to grey out and fully disable forwarding option in outlook.

Marvin Oco do you wish to do this for the tenant or selection of users?

I found this article which covers some scenarios that might be useful - there is a note at the bottom indicating that it may not be complete but it may assist  https://blogs.technet.microsoft.com/exovoice/2017/12/07/disable-automatic-forwarding-in-office-365-and-exchange-server-to-prevent-information-leakage/

I have configured on our tenant scripts that also let me know when a forwarding rule is configured.  This might also be useful depending on what you are trying to achieve.