7 minute read | March.20.2026
The armed conflict involving Iran, neighboring Gulf states, the United States, and Israel, beginning February 28, 2026, has triggered widespread oil and gas supply chain disruptions, which are likely to get worse and not better in the short term. The market impact has been severe: Brent crude has nearly doubled from approximately $60 per barrel at the start of 2026 to over $119 per barrel today, European natural gas prices at the Dutch TTF hub have surged over 100% since late February to above €61 per megawatt-hour.
Force majeure claims are cascading through global energy supply chains following Gulf infrastructure attacks and blockades of key shipping routes (and the withdrawal of price effective insurance cover). Companies should expect claims even from counterparties with no direct Gulf exposure. This alert addresses key contractual considerations for oil and gas companies navigating force majeure claims in this environment.
The conflict has resulted in direct attacks on critical energy infrastructure. For example, Qatar's Ras Laffan terminal—the world's largest LNG facility—has suffered damage expected to reduce export capacity by approximately 17% for three to five years. Shipping risk through the Strait of Hormuz also creates a potential force majeure event.
Force majeure declarations have cascaded outward from the conflict zone including throughout the Middle East and Asia. Additional declarations are expected in other regions with significant Gulf supply exposure, including Europe, North and South America and Africa. Parties far from the conflict zone may face legitimate—or potentially pretextual—force majeure claims in circumstances where contract and project economics have been suddenly changed.
While most oil and gas contracts enumerate war as a force majeure event, the mere existence of armed conflict does not automatically trigger protections. The invoking party must demonstrate a direct causal link between the conflict and its inability to perform—not merely that performance has become more (or prohibitively) expensive. Given longstanding geopolitical tensions in the Persian Gulf, buyers may seek to argue that conflict was reasonably foreseeable. Sellers should be prepared to demonstrate that the specific nature, scope, or timing of the conflict was unforeseeable, or that their contracts do not include a foreseeability requirement. Regard should also be had to contractual notice requirements, which are typically strictly enforced.
Even where force majeure is established, most clauses impose mitigation obligations. Whether a seller must procure supply on the spot market depends on whether the contract designates a specific source. In single-source contracts, force majeure relief may be available if the named facility becomes unavailable. In open-source contracts, sellers may be unable to claim force majeure simply because their preferred source was disrupted if alternative (though costly) sources remain available.
Sellers should document their mitigation analysis and be prepared to demonstrate that alternative sourcing was genuinely unavailable or that the cost differential rises to commercial impracticability—a high bar set well above mere economic loss. Buyers should scrutinize whether contracts contain source restrictions and challenge claims predicated solely on disruption to the seller's usual supply chain.
When force majeure reduces but does not eliminate a seller's supply, allocation becomes critical. Many contracts include pro rata allocation clauses requiring sellers to distribute available supply proportionally among customers. Sellers should avoid giving preference to more commercially favorable contracts. Buyers should review allocation provisions carefully and actively enforce them by demanding disclosure of total available supply and the methodology used to apportion volumes.
The dramatic price increase in oil and gas spot prices creates significant incentive for opportunistic force majeure declarations. A seller obligated to deliver 500,000 barrels monthly at $65 per barrel yields $32.5 million; diverting that volume to the spot market at $119 returns $59.5 million—a $27 million monthly windfall. Buyers should watch for sellers claiming force majeure on some contracts while performing others, or supply appearing on the spot market after a declaration.
Beyond direct supply disruptions, rising energy prices may prompt a secondary wave of force majeure claims from parties with no direct connection to Gulf supply chains. Companies in energy-intensive industries may seek to invoke force majeure to escape contracts made economically untenable by surging fuel costs.
These claims face legal obstacles. Most common law jurisdictions draw a sharp distinction between impossibility/frustration and economic hardship (although those with civil law governed contracts may face claims of hardship or economic unfairness). A party that can still perform but would suffer losses generally cannot claim force majeure relief. Nevertheless, parties may attempt to characterize price increases as triggering enumerated events such as "government action" (e.g., fuel rationing) or catch-all provisions covering events "beyond reasonable control."
Parties should evaluate such claims critically, asking whether the claimed event actually prevents performance or merely increases cost.
Energy companies should conduct a comprehensive review of their contractual portfolios within the next 30 days to identify force majeure exposure, assess the validity of any declarations received, and prepare response strategies. Given the pace of developments and the potential for additional cascading claims, prompt action is essential.
For assistance with risk assessment, contract review, force majeure analysis or dispute strategy, please contact: