S&P affirms Qatar credit ratings, expects 'sizable' assets to mitigate Iran war impact

May 1 (Reuters) - Credit ratings agency S&P Global Ratings maintained Qatar's sovereign ratings at 'AA/A-1+' on Friday, as it expects the country's "sizable accumulated fiscal and external assets" to help cushion the impact of the U.S.-Israeli war on Iran.

"Despite the regional conflict and its impact on gas production, our ratings on Qatar remain supported by the country's sizable external and fiscal net asset stock positions, underpinned by money within the sovereign wealth fund, the Qatar Investment Authority, as well as other funds," S&P said.

The two-month-old Iran war has disrupted shipments through the world's most important oil artery, the Strait of Hormuz, which is a conduit for about 20% of global oil and liquefied natural gas (LNG) supply.

Qatar declared force majeure on some of its LNG output in March following Iranian attacks that damaged infrastructure at the giant Ras Laffan LNG hub, wiping out about 17% of Qatar’s LNG capacity, which could take up to five years to repair.

S&P said on Friday it expects Qatar’s economy to contract by about 5% in real terms in 2026, as LNG production is significantly below pre-war levels and the spillover effect of the war hits nonhydrocarbon sectors like trade, manufacturing and hospitality.

The IMF had said last month that Qatar is among the Gulf economies expected to contract this year.

S&P also maintained Qatar's outlook at 'stable.'

The agency expects regional conditions to gradually stabilize and trade flows through the Strait of Hormuz to resume in the second half of 2026.

Peer agency Fitch had placed Qatar's "AA" sovereign rating on Rating Watch "Negative" in March, citing uncertainty over Qatar's security environment post-Iran war.