On March 16, 2026, oil hit $107.38 per barrel — a price not seen since 2022 — as US-Israeli airstrikes on Iran entered their 19th day. Since the conflict began on February 28, global stock markets have lost 5.5%, the Dow Jones fell 400 points in a single session, and Aluminium Bahrain declared force majeure on all shipments through the Strait of Hormuz. For US businesses with exposure to the Middle East or global supply chains, the legal and financial implications are urgent.
What is happening and why it matters for US businesses
The conflict began February 28, 2026, with joint US-Israeli airstrikes targeting Iranian military infrastructure. Iranian retaliatory strikes have since hit Israel repeatedly, with spillover threatening Saudi Arabia, the UAE, and Qatar's energy facilities.
The economic cascade has been rapid. Brent crude jumped 10-13% in the first week, broke $100 on March 9, and stood at $107.38 on March 18. Global shipping in the Strait of Hormuz — through which roughly 20% of the world's oil and gas transits — has nearly halted. Approximately 200 tankers are reportedly adrift or rerouting. Forty thousand flights have been cancelled across the region.
For US companies, this isn't a distant geopolitical event. It's an active supply chain disruption with legal, insurance, and contractual implications that require immediate attention.
Force majeure: what it means and when it applies
Force majeure clauses appear in most commercial contracts. They excuse a party from performing when an extraordinary event — war, natural disaster, government action — makes performance impossible or commercially impracticable.
The Iran-Israel conflict has already triggered explicit force majeure declarations. Aluminium Bahrain invoked it on March 6 to halt shipments through the Strait. Qatar's energy minister warned that Gulf producers may follow.
For US businesses, the key questions are:
Does your contract have a force majeure clause? Not all do. Without one, parties may still invoke the common law doctrines of impossibility or frustration of purpose — but the bar is higher, and outcomes less predictable.
Does your clause cover "war"? Most force majeure clauses list specific triggering events. A conflict between nation-states typically qualifies as "war" or "armed conflict." The US government's direct military involvement in strikes on Iran — a confirmed fact as of March 2026 — strengthens this classification.
Are you the party seeking to invoke it, or defending against a claim? A supplier invoking force majeure shifts performance risk to you. You may have the right to challenge whether the event truly prevented performance, or whether alternative supply sources existed.
Notice requirements: Most force majeure clauses require written notice within a specific timeframe — often 5-30 days from when the triggering event occurs or becomes known. If you've already been affected, check your contracts now.
Insurance coverage: the act of war exclusion
Here is where US businesses face a critical risk: most commercial property and business interruption insurance policies contain an "act of war" exclusion. If a loss is deemed to result from war or hostile military action, the insurer can deny the claim — even for indirect losses like supply chain disruption or increased shipping costs.
The current conflict presents a gray area. Losses caused by:
- Iranian missile strikes on Israeli facilities your company uses → likely falls under war exclusion
- Shipping rerouting costs due to Strait of Hormuz closure → may or may not be covered, depending on policy language
- Business interruption from a UAE or Gulf supplier suspending operations → depends on whether their force majeure declaration is accepted and your policy's contingent business interruption coverage
What to do now:
- Pull and review every commercial contract with Middle Eastern parties — look for force majeure clauses and notice deadlines
- Review your commercial insurance policies for act-of-war exclusions and contingent business interruption coverage
- Document all losses with dates, connecting them to specific disruptions (not general market volatility)
- If a supplier invokes force majeure, demand written notice and review its validity before accepting excused non-performance
Sanctions compliance: new risks emerging
The Iran conflict has accelerated calls for expanded economic sanctions. As of March 19, 2026, the US Treasury's Office of Foreign Assets Control (OFAC) is expected to issue updated guidance on Iran-related transactions.
Any US company — or non-US company using US financial infrastructure — that has contracts, payments, or business relationships touching Iran faces exposure. Even indirect transactions (through a third-country intermediary) can trigger OFAC liability.
If your supply chain includes any Gulf-based intermediaries or re-exporters, now is the time to conduct enhanced due diligence. Legal counsel specializing in international trade compliance can help identify exposure before an OFAC inquiry arrives.
When to consult a lawyer
The combination of force majeure disputes, insurance coverage fights, and sanctions compliance risk makes this one of the most legally complex commercial environments for US businesses in years.
An insurance law attorney can help you understand whether your business interruption losses are covered or excluded, and whether a force majeure claim against you holds up. A contracts attorney can assess your obligations and options when your suppliers invoke force majeure first.
Early legal review is cheaper than dispute resolution later. The window to file insurance claims is limited; force majeure notice deadlines are running now.
Legal disclaimer: This article is for informational purposes only and does not constitute legal advice. The situation is evolving rapidly. Consult a licensed attorney for advice specific to your contracts and insurance policies.
