Gas and the Gulf crisis: How Qatar could gain the upper hand

Asian markets, military allies and a crucial pipeline all offer Doha leverage against its adversaries amid the current crisis

Middle East Eye


The blockade of Qatar, led by Saudi Arabia and the United Arab Emirates, has already had an economic impact.
Qatar, the world’s second largest producer of helium, has stopped production at its two plants as it cannot export gas by land. Qatar Airways can no longer fly to 18 destinations. Qatari banks are feeling the pinch, particularly the Qatar National Bank (QNB), the region’s largest by assets, and Doha Bank: both have extensive networks across countries which are members of the Gulf Cooperation Council (GCC).
Ratings agency Standard & Poor's (S&P) downgraded Qatar’s credit rating from AA to A- on 8 June. It could put it on credit watch negative, a sign that the crisis could impact investment and economic growth. Moody’s followed suit, placing Qatar’s AA long-term foreign and local currency Issuer Default Ratings (IDRs) on rating watch negative.
Doha is unlikely to buckle soon. It has plenty of financial muscle, not least in its sovereign wealth fund, the Qatar Investment Authority (QIA), which holds an estimated $213.7 billion, according to the Institute of International Finance. The seed capital for that fund comes from Qatar’s oil and gas exports.
Energy receipts account for half of Qatar’s GDP, 85 percent of its export earnings and 70 percent of its government revenue. The crisis may affect the emirate's medium- to long-term energy contracts, as buyers diversify their imports to be less reliant on Qatari gas.

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