Qatar recorded a second-quarter budget deficit of 21.2 billion riyals, or about $5.8 billion, the country’s largest quarterly shortfall since late 2016. The gap was nearly twice the 10.3 billion riyal deficit recorded in the first quarter, taking the first-half 2026 cumulative shortfall to 31.5 billion riyals—already above the full-year budget projection of 21.8 billion riyals. Qatar’s Ministry of Finance attributed the deterioration to the fallout from a US-Iran conflict in late February 2026 that disrupted shipping through the Strait of Hormuz, the main route for the country’s LNG exports. Quarterly LNG exports fell from about 20 million tons to less than 2 million tons, while energy revenue accounts for roughly 80% of government revenue. Q2 revenue totaled about 25.6 billion riyals against spending of approximately 46.8 billion to 46.9 billion riyals. Non-energy revenue rose nearly five-fold from the previous quarter. Qatar’s geographic dependence on the Strait contrasts with Saudi Arabia and the UAE, which have alternative export routes. Economists project a 5% to more than 8% contraction for the full year of 2026. Fitch Ratings removed Qatar from negative watch status in September 2026, citing a lower risk of additional damage to LNG production facilities. Qatar has historically covered budget gaps with sovereign debt and withdrawals from its sovereign wealth reserves, while the North Field expansion is expected to lift annual LNG capacity from 77 million tons to 126 million tons by the end of the decade.