Force majeure at Oil Refineries in Singapore, South Korea and China

Due to the ongoing conflict in the Middle East and the closure of the Strait of Hormuz, the supply and movement of oil have been severely disrupted. As a result, several oil refineries in Asia have declared force majeure, citing disruption in supply of raw materials. For instance, Aster Chemicals and Energy has indicated that declaring force majeure is a step that is “administrative in nature and follows a comprehensive assessment of potential implications on our ability to fulfill obligations to customers”.[1]  China’s Wanhua Chemical has declared force majeure as well on 9 March 2026.[2] With the situation in the Middle East unlikely to abate soon, more refineries across Asia or wider may similarly declare force majeure. Bahrain’s state oil company, BAPCO, has also declared force majeure and stopped supplies due to its refinery being attacked.[3]

Force majeure

Briefly, force majeure is a clause in a contract that allows the party which is declaring force majeure to not fulfill its contractual obligations due to a defined event (usually extraordinary in nature) that is beyond its reasonable control. Events such as natural disasters, wars, government actions, Act(s) of God, are commonly used as events that can allow parties to terminate or to suspend performing their contractual obligations. 

The force majeure clause may not necessarily be used by oil refineries only – other producers in the Middle East, who are unable to ship their products or obtain raw supplies to produce the amounts needed to meet their contractual obligations, may also declare force majeure. Companies such as Aluminum Bahrain, one of the world’s largest smelters, has also declared force majeure due to the lack of safe passage via the normal shipping routes.[4] 

Implications

With oil refineries across Asia and the Middle East declaring force majeure, supplies of key petrochemicals such as ethylene oxide, ethoxylates, styrene monomer, and propylene oxide, amongst others, may be severely disrupted. Industries who depend on such petrochemicals for their daily production will be affected as well, producing a chain reaction across the supply chain. The longer the closure of the shipping routes or lack of alternative shipping routes, the longer the force majeure may be in effect, which will lead to increased prices due to demand and supply issues. Industries may have to shut factories due to the lack of raw materials, which may result in higher costs subsequently as restarting factories can be time-consuming and financially expensive. 

Industries and purchasers of such petrochemicals, byproducts of petrochemicals, or raw materials that are normally obtained in the Middle East should quickly assess its contractual rights and safeguard its supplies elsewhere. Careful contract interpretation, notifications to insurers and to those parties’ own customers are required to avoid further worsening the situation. They may in particular have to consider reviewing their own supply contracts to consider how force majeure of refineries across Asia and the Middle East may affect their own supply chains and contractual obligations including force majeure, either due to a lack of supply of petrochemicals or a significant price surge of such materials. 

[1] Reuters, Singapore’s Aster declares force majeure on disruption in supply of raw materials, 6 March 2026, https://www.reuters.com/business/energy/singapores-aster-declares-force-majeure-disruption-supply-raw-materials-2026-03-06/. 

[2] Reuters, China's Wanhua Chemical declares force majeure on supplies to Middle East, 9 March 2026,  https://www.reuters.com/world/asia-pacific/chinas-wanhua-chemical-declares-force-majeure-supplies-middle-east-2026-03-09/. 

[3] Times of India, Bahrain’s BAPCO declares force majeure after Iran strikes its largest oil facility: What it means, 9 March 2026, https://www.msn.com/en-in/news/world/bahrains-bapco-declares-force-majeure-after-iran-strikes-its-largest-oil-facility-what-it-means/ar-AA1XNPZj?ocid=BingNewsSerp. 

[4] Mining.com, Aluminium Bahrain declares force majeure on contracts, 4 March 2026, https://www.mining.com/web/aluminium-bahrain-declares-force-majeure-on-contracts/.