Qatar finance minister warns: Widespread economic fallout from Middle East conflict imminent; closure of the Strait of Hormuz could trigger a global twin food and energy crisis

Qatar's Finance Minister Ali bin Ahmed Al Kuwari issued a major warning on Wednesday local time, saying the global economy is about to face the full economic impact of the Iran conflict and that the current surge in energy prices is only the beginning of the crisis.

Speaking at an International Monetary Fund (IMF) meeting in Washington, Al Kuwari said bluntly that if the Strait of Hormuz remains blocked and trade restrictions continue to increase, countries highly dependent on natural gas, fertilizers, and helium will be severely hit, and the world could face an even larger economic crisis in the coming months.

“The full impact is now looming,” Al Kuwari emphasized that the recent global surge in energy costs is “just the tip of the iceberg”,and within one to two months the world will face a substantial and severe economic shock. At that time, markets will confront not only high energy prices but direct supply shortages———even those with the ability to pay may be unable to obtain energy, creating an extremely grave situation.

He further noted that global fertilizer production capacity and Middle East supply have been sharply reduced, which could cause the world to miss critical agricultural cycles and ultimately trigger a food crisis. University of Chicago professor Robert Pape also warned in parallel that supply shocks caused by the war are imminent, markets are unprepared, and the crisis goes far beyond rising oil prices, with shortages of key materials likely to spread rapidly across the global economy.

Middle East hostilities severely damage Qatar's economy — LNG facility repairs will take five years

Affected by Iranian missile strikes, Qatar's central Ras Laffan liquefied natural gas plant saw capacity decline by 17%. JPMorgan economists predict Qatar's economy could contract by about 9% this year.

Al Kuwari revealed that full restoration of the damaged LNG facilities and export operations is expected to take five years; meanwhile, Qatar's helium exports, which account for 30% of global supply, also face risks. As helium is a critical raw material for chip manufacturing, fluctuations in its supply will affect the global semiconductor industry.

Despite the economic pressure, Al Kuwari said that thanks to fiscal buffers Qatar's overall fiscal impact remains controllable and no major risks have yet emerged. The country can operate for six months without tapping the Qatar Investment Authority's reserves — the sovereign wealth fund holds large holdings — and, if necessary, will respond to the shock by tightening the budget, raising financing, and deferring some investment projects.