Qatar confronts new economic reality with Wall Street deals, Hormuz hopes

Qatar is lining up a dealmaking spree with Wall Street’s assistance amid fallout from the US-Israel-Iran war. On Sept. 21, the gas-rich Gulf state’s sovereign wealth fund and J.P. Morgan unveiled a $20 billion strategic investment partnership on the heels of the Qatar Economic Forum, the annual showcase of Doha’s global clout.

On paper, the J.P. Morgan deal appeared to be business as usual for the Qatar Investment Authority (QIA), a prolific global dealmaker. In reality, however, the backdrop was anything but normal, starting with Qatar’s flagship investment forum being held in New York rather than Doha. Originally scheduled for May, the conference was postponed as Iranian attacks battered Gulf states.

The "special edition" of the delayed forum took place Sept. 20, ahead of the annual UN General Assembly gathering of leaders and in the wake of Qatar having suffered severe blows from the war, with the closure of the Strait of Hormuz disrupting the liquefied natural gas exports that have made it one of the world’s wealthiest nations. As hostilities near the seven-month mark, the Gulf country stands as one of the war’s biggest economic casualties, with little sign of a deal on the horizon to fully reopen the strait.

The Qatar Economic Forum offered a timely glimpse at Doha's strategy for responding to a crisis shaking the foundations of a national strategy centered on LNG. The J.P. Morgan deal, in particular, sent a message: Qatar still has the financial firepower to play on the global stage.

Nonetheless, the Gulf state’s global investments could soon clash with growing domestic fiscal pressures. Should export disruptions bleed into 2027, Doha may have to rethink how its wealth is deployed and what its economy will look like if key assumptions behind LNG growth plans no longer hold. That could impact everything from major US investment pledges to regional bets on Syria’s reconstruction.

This uncertainty made the New York forum less a showcase of Qatar’s ambitions than a window into a country trying to navigate the gap between its old economic model and a potentially different future.

Frederic Schneider, a Gulf economist and nonresident senior fellow at the Middle East Council on Global Affairs, told Al-Monitor, “LNG will certainly remain the foundation of Qatar's economy for the next decade. However, the war has changed the reliability of that foundation.” 

LNG crisis

The immediate problem is clear enough for Qatar, the world’s second-largest LNG exporter last year, second only to the United States. Unlike Saudi Arabia and the United Arab Emirates, which have crude pipelines that bypass Hormuz, Qatar is almost entirely dependent on the waterway. Iranian strikes have taken nearly 20% of Qatar's LNG export capacity offline, causing damage that could take years to repair.

The International Monetary Fund expects the Qatari economy to contract 8.6% in 2026, the sharpest projected downturn among Gulf oil and gas producers. Qatar’s financial buffers are sizable, but the immediate economic response has involved painful adjustments.

In August, a Financial Times report citing unnamed sources indicated that Qatar had cut government department budgets by as much as 30% and overseas aid by about 85%. These measures are an important signal, noted Masha Kotkin, a fellow focused on energy security at the Center for Strategic and International Studies. “If Qatar is tightening its belt by cutting its budget, what will go?” she remarked to Al-Monitor. “Likely government programing, not investments in LNG.”

The war arrived at a particularly awkward time for Qatar, which is in the midst of a major expansion of its offshore North Field to boost LNG capacity from 77 million tons a year to 126 million tons by 2027. The strategy assumed that rising gas exports would finance the next phase of diversification.

Doha’s logic still holds in the longer-term — but with caveats. As Schneider noted, Qatar remains the world's lowest-cost producer, the North Field expansion will go ahead and roughly $24 billion in revenues lost during the war’s first six months will be recouped once exports resume. The recovery will, however, require that new risks be priced in.

“The war has harmed the assumption that being the cheapest supplier is enough,” said Schneider. “Global customers have now seen a fifth of the world's LNG switched off, something historically unprecedented that has dramatically shifted expectations and risk assessments.” 

Crucially, the success of the North Field depends on the willingness of countries to sign long-term supply contracts, noted Kotkin. “That's what will make the expansion make financial sense,” she said. “To get to that point, about 70% of future gas production needs to be committed to customers.”
 

Diversification dilemmas

With no clear resolution of the Iran conflict in sight, Gulf producers are racing to develop alternative export routes as countries make moves to reduce their reliance on energy transiting Hormuz. Earlier this month, US Treasury Secretary Scott Bessent said that in two years the strait will be a “worthless piece of water.” On this outlook, Qatar has remained an outlier.

During the economic forum in New York, Energy Minister Saad Al-Kaabi pushed back on Bessent’s statement on Hormuz, calling it “completely wrong” and adding that Qatar is not planning to build gas pipelines bypassing Hormuz. They do not make economic sense, he asserted. Experts do not expect big changes in the Qatari position.

“It is difficult to see Qatar diversifying in a way that significantly reduces its reliance on Hormuz,” Justin Alexander, director of Khalij Economics, told Al-Monitor. He noted that technologies such as AI data centers could allow Qatar to effectively export energy through computing rather than molecules, while petrochemicals and fertilizers could potentially be moved through alternative routes. Such projects, however, require time and investment, he added, while Qatar has already committed enormous sums to gas infrastructure.

“In any case, the world needs Qatar's LNG,” Alexander said. “This is why reopening Hormuz in a sustainable way is vital for Qatar and its customers in Asia and Europe, and Qatar has been a lead mediator in trying to make this happen.”

Part of the problem is that the war has exposed vulnerabilities beyond LNG. Qatar has spent years diversifying its economy — including in the tourism, aviation, finance and other sectors — amid efforts to solidify soft power, a push culminating with the 2022 World Cup. Yet, that strategy depended on the assumption that the Gulf would remain stable and prosperous.

New reality

The reopening of Hormuz alone will not fix the new holes in Qatar’s prewar strategy.

Diversification, noted Schneider, can no longer simply mean building a non-hydrocarbon economy on the back of steady LNG income and global confidence in Gulf stability, as both assumptions have been shattered. Qatar now also has to diversify within gas, he argues, by selling security to its customers through storage and swap arrangements in their markets, building supply outside Hormuz, and favoring "value over volume" as new global capacity comes online.

History suggests that Doha is capable of adapting under pressure, as it did when, amid geopolitical differences, neighboring countries launched a diplomatic blockade against it in 2017. The current crisis is, however, different in that it strikes at the infrastructure underpinning the country's wealth.

The Qataris are already adapting. At the September forum, Doha spotlighted a new domestic investment division under QIA tasked with strengthening national companies, expanding private sector participation and deepening Qatar's capital markets. Should priorities increasingly shift toward domestic support, some global activity could be impacted, noted Kotkin, like big US investments pledged by Qatar in May 2025, when President Donald Trump visited the region.

For now, Doha is not retreating from its international strategy. The J.P. Morgan partnership will put $15 billion into public equities and $5 billion into private-market investments in US companies. Meanwhile, there are early signs that Doha’s LNG model is shifting.

Although Qatar has invested in energy assets everywhere from the United States to Libya, its global footprint could still evolve in new ways. On Sept. 10, Bloomberg reported that QatarEnergy was in discussions to secure long-term LNG supplies from the United States, a sign that the Gulf gas-exporting powerhouse might further diversify from domestic production as it accepts a new reality.