Qatar is no stranger to dicey financial situations. In 2017, a full-on trade blockade by Saudi Arabia, Bahrain, Egypt and the United Arab Emirates prompted an outflow of foreign funding from the Gulf state's lenders, forcing Doha to pump $40 billion into the banking sector. Now, the country's liquefied natural gas (LNG) capacity is impaired due to Iranian strikes, and GDP may plunge. The banks look fragile again too. The question is what Qatar's wealth fund and central bank may have to do to ease the financial pain.
To Western investors, Qatar may just look like another rich Gulf petrostate. But Doha lacks the pipelines of Saudi and the UAE, making it entirely dependent on the now-blocked Strait of Hormuz to sell LNG. Iranian attacks on Wednesday also wiped out 17% of Qatar’s LNG output for up to five years, costing some $20 billion in annual revenues. Capital Economics reckons GDP could sink as much as 13% in 2026 - the biggest hit in the region - due to the attacks, which are not yet over.
One specific pain point is the banking sector, which compared with regional peers looks particularly vulnerable to funding shocks. Collectively, Qatari banks had net external debt, opens new tab – which includes interbank loans and deposits held by foreigners – of $120 billion at the end of 2025, equivalent to one-third of domestic loans. According to S&P Global analysts, this makes the sector more susceptible to a scenario where foreigners pull cash or refrain from rolling over wholesale funding. In a stress test, where 50% of foreign interbank funding and 30% of non-resident deposits scarpered, Qatar's lenders would not have enough sellable assets to deal with the exodus, S&P reckons.
All that said, Doha could step in to help again. S&P's stress test only puts Qatari banks' possible funding shortfall, opens new tab in the mid-single-digit billions, which is a fraction of the support provided to the banking system in 2017. The country has other pots of liquidity, including $55 billion of foreign reserves at the end of 2025. Shares in $44 billion Qatar National Bank (QNBK.QA), opens new tab and $14 billion Qatar Islamic Bank (QISB.QA), opens new tab are only down 9% and 6% respectively since the end of February.
Still, there will be many other strains on the state budget if the crisis endures, sapping gas-sale revenues. Even if the war stops now, Qatar may have to sell its gas at a cheaper rate to reflect the now-obvious interruption risk. Pressures like that could widen the country’s fiscal deficit beyond the 3.2% of GDP as estimated by S&P this year.
One specific pain point is the banking sector, which compared with regional peers looks particularly vulnerable to funding shocks. Collectively, Qatari banks had net external debt, opens new tab – which includes interbank loans and deposits held by foreigners – of $120 billion at the end of 2025, equivalent to one-third of domestic loans. According to S&P Global analysts, this makes the sector more susceptible to a scenario where foreigners pull cash or refrain from rolling over wholesale funding. In a stress test, where 50% of foreign interbank funding and 30% of non-resident deposits scarpered, Qatar's lenders would not have enough sellable assets to deal with the exodus, S&P reckons.
All that said, Doha could step in to help again. S&P's stress test only puts Qatari banks' possible funding shortfall, opens new tab in the mid-single-digit billions, which is a fraction of the support provided to the banking system in 2017. The country has other pots of liquidity, including $55 billion of foreign reserves at the end of 2025. Shares in $44 billion Qatar National Bank (QNBK.QA), opens new tab and $14 billion Qatar Islamic Bank (QISB.QA), opens new tab are only down 9% and 6% respectively since the end of February.
Still, there will be many other strains on the state budget if the crisis endures, sapping gas-sale revenues. Even if the war stops now, Qatar may have to sell its gas at a cheaper rate to reflect the now-obvious interruption risk. Pressures like that could widen the country’s fiscal deficit beyond the 3.2% of GDP as estimated by S&P this year.
Qatar has meaningful airbags, though. Its central bank could sell some of its $18 billion in gold holdings, which have nearly doubled in value, opens new tab since last year. More importantly, the $580 billion Qatar Investment Authority sovereign wealth fund owns high-profile equity stakes in European blue chips like Volkswagen (VOWG.DE), opens new tab, Glencore (GLEN.L), opens new tab and Barclays (BARC.L), opens new tab, plus holdings in prime London real estate like Harrods, Heathrow Airport and Canary Wharf. Depending on how much further the Gulf conflict deteriorates, the QIA may find it prudent to shore up its finances by turning some of these crown jewels into cash.
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