HORMUZ IN CRISIS: LEGAL CONSEQUENCES FOR INTERNATIONAL SUPPLY CONTRACTS
Supply chain disruptions are a recurring phenomenon in the globally interconnected economy. Gazprom’s curtailments and complete cessation of gas supplies to European importers, escalating sanctions against Russia and the unprecedented tariffs announced by President Trump on 2 April 2025 have each compelled commercial entities to reassess their contractual positions.
The Strait of Hormuz, a critical conduit for global energy and commodity flows, has recently been effectively closed to commercial passage following the US-Iran conflict. This closure has disrupted international supply networks, driven energy prices sharply upward, caused severe shortages of critical raw materials and precipitated a wave of legal disputes under cross-border commercial agreements.
Although international law grants vessels the right of unimpeded transit through straits used for international navigation, commercial realities diverge. The ongoing armed conflict has compelled parties to address the resulting contractual and financial consequences as they arise.
In March 2026, QatarEnergy, the world’s largest liquefied natural gas (LNG) exporter, invoked force majeure across its entire LNG portfolio after two of its liquefaction trains were destroyed. The declaration affected both spot and long-term supply commitments, setting off a chain of downstream force majeure notifications. Comparable declarations have followed from national oil companies and international majors operating in Iraq, Israel, Bahrain, Kuwait, the United Arab Emirates (UAE) and Oman, and from trading houses dependent on Qatari LNG volumes.
In addition to energy and oil companies, several other commodity markets are experiencing significant supply disruptions. Helium and bromine, both essential for semiconductor fabrication, are among the most severely affected, along with urea and ammonia, which are key components in fertiliser production.
Jul-Sep 2026 issue
Peter&Kim