Impact of Middle East crisis on India’s energy supply

India is the third-largest consumer of oil and the 14th-largest consumer of gas in the world. A total of 87% of the country’s annual oil and gas requirements are met by imports, which are handled by national oil companies and private players. Since India is heavily dependent on imports, uninterrupted petroleum supply chains are critical to its economy. The outbreak of the US-Iran conflict in early 2026, which led to the near total shutdown of the Strait of Hormuz, has triggered a force majeure domino effect across the supply chain.

Essential commodities under Indian law. Petroleum and petroleum products are covered as essential commodities under the Essential Commodities Act, 1955. The Supreme Court of India, in Association of Natural Gas and others v Union of India, has held that natural gas and liquefied natural gas (LNG) come within the purview of petroleum and petroleum products. The government, through its powers conferred under section 3 of the Essential Commodities Act, 1955, can regulate supply, distribution, trade, and commerce concerning petroleum to maintain or increase supplies of petroleum and petroleum products.

Geopolitics and oil-gas contracts

Impact of the geopolitical situation on oil and gas contracts. One of the first instances of force majeure invocation since the breakout of the war happened on 3 March 2026, when Qatar Energy, supplier of 34% of India’s liquefied petroleum gas (LPG) and 50% of its LNG, declared force majeure. As contractual obligations were suspended without constituting a breach, Indian importers could not compel supply or seek damages. Within days, Kuwait Petroleum and Bahrain’s Bapco also declared force majeure, while Saudi Aramco and the UAE’s ADNOC closed key refineries.

The geopolitical situation in the Middle East, leading to disruptions in the oil and gas supply chains, has had a cascading effect on the downstream operations in India. India’s major importer, Petronet LNG, invoked force majeure against Qatar Energy because its vessels could not reach loading terminals. Starved of stable contract volumes, downstream city gas distributors were hit next: Gujarat Gas invoked force majeure as LNG supplies dried up, while Adani Total Gas was forced to buy hyper-inflated spot market gas, nearly tripling prices for industrial consumers.

Force majeure: UAE v India

Force majeure under UAE and Indian law. Under UAE law, parties are entitled to force majeure protection, based on statutory provisions, even when the underlying contract does not contain an express force majeure clause. India, on the other hand, does not have a statutory force majeure provision under the contract law.

The law places great significance on contractual wording. However, courts have placed emphasis on section 56 of the Contract Act, 1872, which is aligned with the English law doctrine of frustration. The threshold required is that the performance must be rendered impossible, and mere change in circumstances will not suffice.

India energy controls amid disruptions

Measures taken by the Indian government in response to the geopolitical situation. In response to petroleum supply disruptions, the Indian government imposed emergency energy controls to ensure the availability of natural gas in priority sectors through the Natural Gas (Supply Regulation) Order, 2026. This regulation overrode private gas contracts and prioritised supplies for households and public transport, while fertiliser and industrial sectors faced sharp curtailments. Fertiliser plants were capped at 70%, and manufacturing grids were heavily curtailed, causing industrial hubs like Gujarat’s Morbi to grind to a near halt.

While the outbreak of the war in the Middle East represents a justifiable force majeure event for entities undertaking upstream operations in the region, the Natural Gas (Supply Regulation) Order, 2026, alters the manner in which contractual obligations in the downstream sector will be performed in India. This government intervention may independently constitute a force majeure event in supply chain contracts where the contracts include “government action” or “change in law” as a force majeure event.

Prolonged crisis fuels India disputes

If the geopolitical crisis in the Middle East continues for a long period, there is a likelihood of complex contractual and regulatory disputes across the oil and gas sector in India. While upstream operators are likely to have the benefit of force majeure invocation, downstream operators may face commercial hardship and increased procurement costs on account of sovereign interventions like the Natural Gas (Supply Regulation) Order, 2026.

Rahul Sinha is a partner and Mohd Shahan Ulla is an associate partner at DSK Legal