Bahraini oil company declares 'force majeure', unable to deliver oil

(Patria) - Bahrain's state-owned oil company, Bapco, has declared a state of force majeure for its deliveries after Iran attacked the country's only oil refinery, according to media reports.

This move followed similar disruptions in the region; last week, Qatar, the largest producer of liquefied natural gas in the Gulf, suspended operations at its facilities on Monday, and then declared force majeure for gas exports on Wednesday. This legal move frees companies from contractual obligations to their customers due to extraordinary circumstances.

The declaration of "force majeure", known in international law as force majeure, represents the activation of a contractual clause that exempts parties from liability in the event of unforeseen and unavoidable events beyond their control. In the context of the oil industry and current conflicts, it is a key defense mechanism for companies like Bahrain's Bapco or Qatari energy giants.

When a company declares force majeure, it officially informs its partners that due to external factors, in this case, war operations and attacks on infrastructure, it is temporarily unable to deliver the agreed-upon goods.

This avoids large financial penalties and claims for damages that customers might otherwise file for breach of contract. For an event to be legally recognized as force majeure, it must be extraordinary, unforeseeable at the time of contract conclusion, and impossible to prevent, which direct military attacks on production facilities certainly are.