Armed conflict in the Middle East rarely stays contained to the immediate area of conflict. It has a knock-on effect, disrupting supply chains, delaying shipments, pushing up energy prices, and suddenly making business more expensive. When those pressures start to bite, a familiar question emerges: can companies walk away from contracts, or at least pause their obligations, for example by relying on force majeure clauses?
Rising Energy Costs and the Impact on UK Businesses
The conflict in the Middle East has disrupted oil and gas supplies, leading to sharp increases in global energy prices. According to figures published by the UK Parliament, UK wholesale natural gas prices increased by around 75% between late February and 23 March 2026. Prices for petroleum-based products such as jet fuel and heating oil have also risen significantly. The conflict has also affected other industries, with fertiliser prices increasing due to disruption in the Persian Gulf, a major fertiliser production and export hub.
The effects are already being felt across the UK by both consumers and businesses. Petrol prices rose by around 10% and diesel prices by roughly 20% between 28 February and 23 March, while farmers have reported major increases in fuel and fertiliser costs. Businesses in sectors including agriculture and manufacturing are dealing with rising energy costs that could lead to higher prices for consumers. Organisations such as the National Farmers’ Union and Make UK have warned that increased fuel, fertiliser and industrial energy costs may drive up food prices and place additional pressure on manufacturers.
Can You Pause or Renegotiate a Contract Through Force Majeure?
Force majeure is a legal concept in contract law that covers extraordinary events beyond a party’s control that prevent or hinder them from fulfilling their contractual obligations.
A force majeure clause may allow a party to:
- Suspend performance temporarily, or
- Avoid liability for non-performance, or
- In some cases, terminate the contract.
To be able to rely on this clause, parties that have been affected must often prove that:
- The event was outside their control
- It was unforeseeable and/or unavoidable
- It directly prevented or significantly hindered performance
Force majeure is not a general principle in contract law, meaning that a party will only be able to rely on it to the extent written into the contract.
What Qualifies as an Extraordinary Event Under Force Majeure?
Each contract may define force majeure events differently. However, common terms that frequently appear in force majeure clauses include:
- Natural disasters (e.g. earthquakes, floods, hurricanes)
- Fire or explosion
- War, invasion, or armed conflict
- Epidemics and pandemics
- Terrorism or civil unrest
- Government action or intervention
- Changes in law or regulation
- Failure of utilities (power, water, telecommunications)
- Transportation disruptions
- Shortage of materials or supply chain disruption
- Embargoes or sanctions
- Nuclear, chemical, or biological contamination.
The occurrence of one of the above listed events will not, in itself, necessarily entitle a party to rely upon the force majeure provision. Whether relief is available will depend on the particular circumstances and whether the relevant event was genuinely beyond the reasonable control of the affected party. In assessing this, consideration may be given to the extent to which the party could reasonably have anticipated, mitigated, or avoided the effects of the event. For example, a logistics service provider may be expected to have appropriate contingency measures in place to address disruption affecting one of its supply or transport routes, such that the disruption would not automatically constitute a force majeure event.
It is often the measures taken by governments or authorities in response to a specific event that make the performance impracticable.
There is a key element of foreseeability to consider, if the event (which is the subject of force majeure) was foreseeable at the time the contract was entered into, the affected party may not be entitled to contractual relief.
Can the Middle East Conflict Qualify as a Force Majeure Event?
Many force majeure clauses expressly include events such as war, armed conflict, acts of terrorism, and government sanctions or embargoes within their scope. Where a contract contains this type of wording, disruption caused by conflict in the Middle East may qualify as a force majeure event. However, establishing that the conflict falls within the definition of force majeure is only the first step. A party seeking to rely on the clause must also show that the event has directly prevented, hindered, or delayed its ability to perform its contractual obligations.
Can You Exit a Contract Due to Price Increases?
This is where it gets tricky - price increases alone are usually not enough.
Under English law:
- Force majeure typically applies only if performance becomes impossible, not just more expensive.
- Courts generally hold that commercial hardship or reduced profitability is not sufficient.
For example:
- If shipping routes are completely blocked due to conflict = stronger case
- If oil prices rise and your costs increase = weaker case
So it seems that four criteria will usually have to be satisfied In order to rely on a force majeure clause:
- the relevant event falls within the scope of the force majeure clause;
- the event has prevented, hindered, or delayed performance, (not just made it more expensive);
- the effects of the event could not reasonably have been avoided or mitigated; and
- proper notice was given (as force majeure clauses often require prompt notification).
In short, unless the impact of rising prices crosses the line from making performance more expensive to genuinely preventing it, force majeure is unlikely to provide a way out of the contract.
If Force Majeure Cannot Be Relied Upon, Is Frustration an Option?
If a party is unable to rely on a force majeure clause, it may consider whether the contract has been “frustrated”. Under English law, frustration occurs where:
- an unforeseen event,
- outside the control of the parties,
- renders contractual performance impossible, illegal, or radically different from what was originally contemplated.
The threshold for establishing frustration is high, and the doctrine is applied narrowly by the courts. Sudden increases in the cost of raw materials, shipping, fuel, or insurance caused by regional conflict are unlikely, on their own, to amount to frustration, particularly where performance remains technically possible. English courts have consistently held that increased expense or reduced profitability does not generally frustrate a contract (Tsakiroglou & Co Ltd v Noblee Thorl GmbH [1962] or The Sea Angel [2007]).
Nevertheless, where the conflict causes severe and prolonged disruption (for example, by making transportation routes unavailable, preventing access to critical goods, or fundamentally altering the nature of the contractual obligations), frustration may potentially arise, automatically discharging the parties from further performance.
Practical Reality
In most cases:
- Businesses cannot simply walk away from contracts due to price spikes caused by war
- They may instead:
- Seek to renegotiate terms
- Use price adjustment clauses where appropriate. It may be prudent for suppliers to include such provisions in their contracts, allowing them to pass through exceptional increases in their costs. However, these clauses can be difficult to negotiate, as they inevitably conflict with the customer’s desire for cost certainty.
- Seek alternative suppliers
Conflict in the Middle East could trigger force majeure clauses - but only in limited circumstances. The key distinction is between impossibility and inconvenience. A dramatic rise in costs, even if caused by conflict, will rarely be enough on its own to legally exit a contract under English law.
Conclusion
Businesses affected by rising energy, fuel, shipping, or raw material costs linked to the conflict in the Middle East should carefully review the wording of their contracts before taking action. Whether a party can rely on a force majeure clause will depend on the specific contractual terms, the nature of the disruption, and the extent to which the conflict has impacted performance.
For tailored legal advice on contracts affected by price increases or supply chain disruption arising from the conflict, and guidance on whether force majeure may apply, contact Culbert Ellis for commercial contract advice.
How To Get In Contact
To find out more or if you require assistance with any aspect of contract law, speak with our team on +44 (0)204 600 9907 or email info@culbertellis.com.
Accurate at the time of writing. This information is provided for general information purposes only and should not be relied upon as legal advice.
