India’s energy sector faces mounting pressure as Middle East tensions disrupt global oil and gas flows. The country imports 87% of its oil and gas needs, making it vulnerable to supply chain shocks. In early 2026, the US-Iran conflict led to the Strait of Hormuz’s near-total closure, triggering a domino effect across petroleum networks. This crisis has exposed gaps in India’s energy security, forcing regulators and businesses to address uncharted legal and operational challenges.
Force Majeure and Contractual Breakdowns
Qatar Energy, a key supplier of India’s liquefied petroleum gas (LPG) and liquefied natural gas (LNG), invoked force majeure on March 3, 2026, citing regional instability. This move suspended contractual obligations without legal penalties for Indian importers. Soon after, Kuwait Petroleum and Bahrain’s Bapco followed suit, while Saudi Aramco and UAE’s ADNOC halted refinery operations. Petronet LNG, India’s largest LNG importer, then invoked force majeure against Qatar Energy, citing blocked vessel access to loading terminals.
Downstream operations suffered next. Gujarat Gas, a major city gas distributor, declared force majeure as LNG supplies dwindled. Adani Total Gas, lacking stable contracts, resorted to buying spot market gas at prices nearly tripled, pushing industrial users to the brink. Legal frameworks differ: UAE law allows force majeure protections even without explicit clauses, while India relies on Contract Act, 1872, requiring performance to be “impossible” for relief.
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The crisis has also tested India’s legal tools. Under the Essential Commodities Act, 1955, the government can regulate petroleum supply. This power was invoked through the Natural Gas (Supply Regulation) Order, 2026, which prioritized household and public transport needs over industrial sectors. Fertilizer plants faced 70% output caps, while manufacturing grids in Gujarat’s Morbi region nearly collapsed. This intervention could itself qualify as a force majeure event in downstream contracts referencing “government action” as a trigger.
Long-Term Risks and Industry Shifts
If the Middle East crisis persists, disputes over contract enforcement and regulatory compliance could escalate. Upstream operators may continue citing force majeure, but downstream firms face rising costs and operational strain from emergency measures. Legal experts warn of potential conflicts between contractual obligations and state-mandated supply reallocations, particularly in sectors reliant on fixed-volume agreements.
India’s energy sector, already stretched by import dependence, now grapples with a dual challenge: securing immediate supply while addressing long-term vulnerabilities. The government’s emergency measures have stabilized critical sectors but may complicate future negotiations with suppliers. For now, the focus remains on maintaining essential services, even as the cost of disruption reverberates through refineries, factories, and households.
