Qatar cuts state budget by 30% due to war in Iran

The Qatari government has cut its state budget by 30 percent and cut its humanitarian aid abroad by about 85 percent, as it seeks to cushion the blow from the ongoing war between the United States, Israel and Iran. The Cradle, citing the Financial Times, reports that Doha officials are planning to cut spending further.

Qatar's main source of income is liquefied natural gas (LNG). Iran's retaliatory strikes on US bases in the country have disrupted gas production. The remaining production has also become difficult to transport through the Strait of Hormuz. According to three sources familiar with the matter, the budget cuts were due to a sharp drop in gas revenues.

Doha had set a budget for 2026 of about $61 billion. However, it was not clear how much the overall budget had been reduced after the spending cuts were made. According to the International Monetary Fund, Qatar will experience the biggest economic decline among the six Gulf states, with its output set to shrink by 8.6 percent in 2026.

Tariq Youssef, a senior fellow at the Middle East Council on Global Affairs, said Doha would have to cut spending even more in 2027 if the crisis continues into the final quarter of the year. Youssef said the government is managing the crisis effectively, but the damage has been significant. They are using the financial reserves they have accumulated to keep the economy and liquidity in check, but this is leaving a big hole in the budget.

These financial reserves include the Qatari Sovereign Wealth Fund, which has assets worth $500 billion. Doha does not disclose exactly how much it spends on foreign aid. According to the Qatari Foreign Ministry, in 2025 the country transferred $ 1.5 billion to the UN Office for the Coordination of Humanitarian Affairs and was among the five largest donors.

The Ras Laffan complex, the world's largest exporter of LNG, was attacked by Iranian drones and missiles in February, on the fourth day of the war. Iran struck the plant again in March. The complex also suffered a major explosion on June 21. At least 13 people were killed and 66 others injured in the fire that followed the incident. As a result, 17 percent of the export capacity was out of service. It is expected to take up to 5 years to repair the plant.

Due to the damage, QatarEnergy declared a state of force majeure under gas supply contracts. This released the company from obligations to buyers in Europe and Asia. Reuters reports that to supply Asian customers with gas while exports have stalled, the state-owned company has purchased 33 STG cargoes from the United States in 2026, spending about $1 billion on the deal. The gas products are being delivered to South Korea, Taiwan, Bangladesh, India and Japan.