Bahrain Oil Firm Declares Force Majeure After Iranian Strikes Disrupt Gulf Energy

Bahrain's Bapco Energies declares force majeure after Iranian drone/missile attack damages Sitra refinery amid escalating Gulf conflict.

Cover Image Attribute:  Bapco's Sitra refinery under Iranian drone and missile attacks / Source: Reuters

 Bahrain's state-owned oil company Bapco declared force majeure on its group operations on March 9, 2026, after an Iranian missile and drone attack damaged its main refinery on Sitra Island and triggered fires at part of the facility. The announcement, reported by the Bahrain News Agency, cited the ongoing regional conflict and the direct impact of the strike as reasons for invoking the clause, which allows companies to suspend contractual obligations under extraordinary circumstances.
In its statement, Bapco indicated that affected operations included shipments, while emphasizing that local demand for fuel and related products would continue to be met through existing contingency plans. The company operates Bahrain's primary refinery on Sitra Island, which processes crude oil for domestic use and export. The attack, described by Bahraini authorities as involving Iranian drones and missiles, caused a fire at one unit of the facility, though officials stated the blaze had been contained in earlier incidents related to the escalating violence.
The declaration comes amid a broader wave of Iranian retaliatory strikes across Gulf Arab states, which have targeted energy infrastructure and other sites since late February 2026. Bahrain reported that an Iranian drone attack on Sitra overnight injured 32 people, all Bahraini citizens, with four cases classified as serious. Among the wounded were a 17-year-old girl suffering severe head and eye injuries and a two-month-old infant. Health authorities provided medical care, but the incident underscored the civilian toll of the widening conflict.
Similar incidents were reported in Qatar, where the defense ministry said its forces intercepted incoming missiles after explosions were heard in Doha. Saudi Arabia's defense ministry announced the interception and destruction of two waves of drones directed toward the Shaybah oil field in the southeast. The United Arab Emirates reported air defenses responding to a missile threat, according to a statement from its National Emergency Crisis and Disaster Management Authority. Kuwait, which had faced attacks the previous day involving seven missiles and five drones, reported additional incoming threats on March 9, with defenses actively engaging.
The strikes have heightened fears over disruptions to global energy supplies, particularly through the Strait of Hormuz. This narrow waterway, bordered by Iran, handles approximately 20 percent of the world's daily crude oil shipments, equivalent to about 15 million barrels, originating from major producers including Saudi Arabia, Kuwait, Iraq, Qatar, Bahrain, the United Arab Emirates, and Iran itself. Threats of Iranian missile and drone attacks have already slowed tanker traffic, raising concerns among analysts that sustained interference could lead to tighter global supplies and further market volatility.
Global oil prices reacted sharply to the developments. Brent crude, the international benchmark, climbed to $107.97 per barrel, marking a 16.5 percent increase from the previous close. West Texas Intermediate, the U.S. benchmark, reached approximately $106.22 per barrel, up nearly 17 percent. The surge pushed prices above $100 per barrel for the first time in more than three and a half years, reflecting investor anxiety over potential production halts and shipping route blockages in the region.
Financial markets also felt the impact, with investors selling off equities amid the energy shock. Stock indices declined by around 3 percent in major exchanges as crude prices rose, highlighting the broader economic ripple effects of the conflict.
The United States has taken precautionary measures in response to the deteriorating security environment. The State Department ordered non-emergency U.S. government employees and their family members to leave Saudi Arabia due to safety risks associated with the ongoing attacks. The advisory noted threats to diplomatic facilities, including prior drone strikes that damaged the U.S. embassy in Riyadh last week, as well as incidents affecting U.S. embassies in Kuwait and the United Arab Emirates.
The attacks form part of an escalating confrontation involving Iran and various regional actors, including U.S. and Israeli interests. Gulf states have repeatedly condemned the strikes, with joint statements from countries including Bahrain, Jordan, Kuwait, Qatar, Saudi Arabia, and the United Arab Emirates denouncing the actions. Iran has framed its operations as retaliation against prior aggression, though details of specific triggers remain contested among parties.
The situation has prompted concerns about the vulnerability of critical infrastructure across the Gulf. While many past Middle East conflicts spared major energy facilities, recent incidents—including strikes on refineries in Bahrain and other locations—have shifted that pattern. Bahrain's refinery, with a capacity recently expanded to around 400,000 barrels per day, represents a key asset for the small island nation's economy, which relies heavily on oil and gas revenues.
For now, energy traders and governments are closely monitoring developments for signs of prolonged disruption. Though the force majeure declaration signals immediate operational challenges for the company, its assurance of meeting domestic needs aims to limit short-term domestic fallout. Internationally, the combination of physical attacks, intercepted threats, and surging commodity prices illustrates how quickly regional tensions can influence worldwide markets and security postures. Diplomats and analysts continue to watch for any de-escalation efforts amid the rapidly evolving crisis.  

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