The author is a Reuters Breakingviews columnist. The opinions expressed are his own. Refiles to say Qatar not Qatar's in paragraph six.

By George Hay

LONDON, March 20 (Reuters Breakingviews) - 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 QNBK.QA and $14 billion Qatar Islamic Bank QISB.QA 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 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, Glencore GLEN.L and Barclays BARC.L, 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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CONTEXT NEWS

Iranian attacks ‌have knocked out 17% of Qatar's liquefied natural gas (LNG) export capacity, causing an estimated $20 billion in lost annual revenue and threatening supplies to Europe and Asia, QatarEnergy's CEO and state minister for energy affairs told Reuters on March 19.

Saad al-Kaabi said two of Qatar's 14 LNG trains and one of its two gas-to-liquids (GTL) facilities were damaged in ​the unprecedented strikes. In the gas industry, "train" is a standard term for a processing unit within a plant. The repairs will sideline 12.8 million tons per year of LNG for three to five years, he said ​in an interview.

State-owned QatarEnergy will have to ​declare force majeure on long-term contracts for up to five years for LNG supplies bound for Italy, Belgium, South Korea, and China due to the two damaged trains, Kaabi said. Force majeure is a legal concept under which exceptional circumstances prevent a company from doing something it had promised to do. Declaring it would effectively excuse QatarEnergy for failing to deliver contracted supplies.

(Editing by Liam Proud; Production by Streisand Neto)

((For previous columns by the author, Reuters customers can click on HAY/george.hay@thomsonreuters.com))