Against the backdrop of escalating disruption in the Strait of Hormuz, energy companies are being forced to reassess contractual obligations amid heightened geopolitical risk, strained supply routes and tightening sanctions scrutiny. In this environment, experts emphasize that cautious, evidence-based decision-making is critical to avoid inadvertently breaching contracts while navigating uncertain and rapidly shifting conditions.
“A frequent grey area arises where counter parties or vessels are not expressly designated, but are considered high-risk,” Bracewell’s Dave Shargel told Lexology. “In those cases, parties must be cautious: declining performance based on perceived sanctions exposure, without a firm legal basis, may itself constitute a breach.”
In navigating alternative sourcing options, Bracewell’s Mark Hunting said the key is understanding where contractual leverage sits. “Countries want their oil to get to market. Legal teams that can draw connections between upstream agreements and midstream agreements will have the best leverage,” Hunting added.
