Escalating geopolitical tensions in the Middle East are disrupting global supply chains, maritime routes, and energy markets. The blockade over the Strait of Hormuz, and curtailed aviation routes, is having real time impact on business continuity. Companies with operations, suppliers, or contractual relationships connected to the region should act now to manage their legal and commercial exposure.

Who Is Most at Risk?

Energy, petrochemical, and global manufacturing/ projects businesses face the greatest impact. Disruptions to oil, LNG, and feedstock supplies can trigger price volatility and shortages, with cascading effects across downstream industries. Even short-term supply interruptions can create serious contractual and operational risks.

Force Majeure: Can You Rely on It?

Many commercial contracts include force majeure clauses covering events such as war, armed conflict, and transport disruption. However, these clauses vary widely, and relying on them requires careful analysis.

Key points to consider, include:

  • Does the clause cover this situation? Check whether the defined triggering events expressly include war, sanctions, embargoes, port closures, or supply chain disruptions. Narrowly drafted clauses may still apply if they include broader language such as “events beyond reasonable control”.
  • What is the contractual threshold? Clauses that require the event to “prevent” performance set a higher bar than those using “hinder” or “delay”. Increased cost or commercial inconvenience alone is unlikely to suffice.
  • Have you given proper notice? Most clauses require prompt written notice within a specified timeframe. Failure to comply can invalidate a claim entirely.
  • Can you show mitigation efforts? Document steps taken to reduce the impact — such as sourcing alternative suppliers, routes, or logistics providers.
  • Watch for knock-on effects. Invoking force majeure under one contract may create exposure under related agreements, such as back-to-back supply arrangements.
  • Consider termination triggers. Many contracts allow termination if a force majeure event continues beyond a specified period. Assess both the risks and strategic implications.

Shipping and Trade: Review Your Arrangements

In addition, companies involved in international trade should review key provisions in their shipping and logistics contracts, including:

  • War risk clauses in charterparty agreements
  • Safe port warranties
  • Insurance coverage and war risk exclusions
  • Maritime advisories for high-risk regions and shipping lanes

Sanctions and Regulatory Compliance

Geopolitical developments can also lead to rapid changes in sanctions and trade restrictions.

Companies should therefore:

  • Screen counterparties and intermediaries against applicable sanctions lists (including US, EU, and UK regimes).
  • Monitor regulatory updates affecting trade routes, financial institutions, and specific entities.
  • Map supply chain relationships to identify exposure to sanctioned jurisdictions or restricted goods.
  • Confirm payment routes remain clear and that financial institutions can process transactions without restriction.
  • Check insurance coverage responds to geopolitical and sanctions-related events.

Recommended Next Steps

  • Identify dependencies on Middle Eastern suppliers, logistics routes, and energy feedstocks.
  • Review force majeure, hardship, and termination provisions across key contracts.
  • Stay informed on sanctions, trade restrictions, and maritime advisories.
  • Document all disruptions, counterparty communications, and mitigation efforts to protect your position in any future disputes.