Qatar's government revenue fell 42% in the first half of 2026, according to Emir Sheikh Tamim bin Hamad Al Thani, who highlighted the impact of the Iran war on its energy exports. The decline underscores the severe economic strain caused by the closure of key infrastructure, including the Ras Laffan gas complex, which was damaged by Iranian strikes. Public spending also dropped 14% during the same period, though the emir assured that essential services and development goals remain unaffected. Qatar's financial resilience, including larger reserves and conservative oil-price assumptions, has helped mitigate the crisis, with over QR221 billion in planned investments for the next five years.
The financial strain has been stark, with the second-quarter deficit reaching QR21.2 billion, nearly double the first-quarter gap. The government's 2026 budget, which assumed oil at $55 a barrel, has been significantly impacted by the war, with revenue plummeting 57% compared to the previous year. The damage to critical infrastructure, such as the cold boxes at Ras Laffan, has led to prolonged repair times and significant revenue losses, with QatarEnergy estimating annual losses of up to $20 billion. The situation has disrupted long-term supply deals with major buyers, including Italy's Edison and South Korea's KOGAS.
Despite some signs of partial recovery, such as the partial restart of the Pearl gas-to-liquids plant, overall LNG exports remain at a fraction of pre-war levels. In September, Qatar exported 1.6 million tons of LNG, the highest since the war began, but still less than a quarter of its pre-war average. The supply crunch is affecting Europe, with companies like Edison and EDF facing disruptions and uncertainty. Meanwhile, Qatar is seeking financial relief through international bond markets, having sold $3 billion in bonds in September and being removed from a downgrade watch list by Fitch.
The broader economy is also feeling the impact, with the oil and gas sector shrinking 50.7% year-over-year in the second quarter, while other industries grew 2.6%. The emir noted that non-energy sectors now account for about 80% of economic output, signaling a shift in the country's economic structure. However, the IMF has revised its forecasts, predicting a 15.6% contraction in Qatar's economy this year, followed by an 18.8% rebound in 2027 if the Strait of Hormuz reopens. Despite the challenges, the North Field expansion project remains on track, aiming to boost Qatar's LNG capacity to 142 million tons a year by 2030.