Force Majeure Spreads Across Global Commodities as Iran War Disrupts Supply
Force majeure declarations are beginning to ripple across the global commodities sector as the escalating conflict in the Middle East threatens to spread shocks beyond oil and gas.
Energy companies, producers, and traders are already grappling with interruptions to shipments through the Strait of Hormuz, the narrow waterway linking the Persian Gulf to global markets.
The strait typically carries roughly one-fifth of the world’s oil and liquefied natural gas supply, making it one of the most important chokepoints in global commodity trade.
Energy producers declare force majeure
Some of the first force majeure declarations have emerged from the energy sector.
QatarEnergy declared force majeure on liquefied natural gas (LNG) deliveries this week after attacks forced the state-owned company to halt production at key facilities. The decision followed strikes on two LNG installations and continuing security threats in the region.
In Israel, Chevron (NYSE:CVX) also declared force majeure at the Leviathan offshore gas field after authorities ordered a shutdown following US–Israeli strikes on Iran and subsequent retaliation across the region.
Leviathan is Israel’s largest gas field and supplies natural gas to Israel, Egypt and Jordan. The suspension marks the second time in less than a year that regional hostilities have interrupted operations at the site.
Meanwhile, oil producers in the Gulf have begun cutting output as tankers struggle to move through Hormuz. The United Arab Emirates (UAE) and Kuwait have both started reducing production after storage facilities began filling up when exports could not leave the region.
Aluminum, precious metals markets feel the shock
Aluminium Bahrain BSC has invoked force majeure on some shipments after maritime traffic through Hormuz effectively stalled. The company said the measure was tied to transit disruptions rather than damage to its smelter operations.
The announcement sent aluminum prices sharply higher. Futures in London surged to their highest level since 2022, rising as much as 5.1 percent during trading before settling higher on the day.
The aluminum market is particularly sensitive to supply disruptions because the metal is used across a wide range of industries, including automotive manufacturing, construction, appliances and packaging. Even short interruptions can create shortages for manufacturers that rely on tightly timed deliveries of specialized metal products.
Mining financier Robert Friedland, founder of Ivanhoe Mines (TSX:IVN,OTCQX:IVPAF), warned that the broader consequences of a prolonged closure of the Strait of Hormuz could extend far beyond the Gulf region.
“Further to what we said about the impact that the closing of the Strait of Hormuz has on the sulphur market… and therefore African copper production… Craig Tindale maps out that this is only one small…
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