Qatar has options amid Gulf’s worst financial hit

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By George Hay 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 – 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 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 QSE:QNBK and $14 billion Qatar Islamic Bank QSE:QIBK 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-obvi...

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