The US-Israeli war on Iran, which began on 28 February, has been presented in Washington as a response to “imminent threats” and concerns over nuclear proliferation.
Ceasefire talks in Islamabad collapsed on 12 April after 21 hours without a deal, and the US naval blockade of Iranian ports took effect on 13 April.
Yet the strategic context is broader than the official narrative suggests. As artificial intelligence increasingly shapes economic and geopolitical competition, the conflict in the Middle East also intersects with a growing struggle over the infrastructure that powers large-scale computing.
In this sense, the confrontation with Iran may reflect not only traditional security concerns but also the emerging geopolitics of computational capacity.
Recent analyses indicate that the expansion of AI infrastructure is increasingly constrained by physical inputs rather than by algorithmic progress. Key bottlenecks include electricity supply, cooling capacity, specialised chips, and high-speed networking.
Among these, electricity has become the most critical constraint.
Large AI clusters require extremely high power density, while grid capacity in many western economies has not expanded at the same pace. In several regions, new data centres are facing delays of three to five years in obtaining grid connections.
AI chips, particularly graphics processing units (GPUs) used to train large models, generate substantial heat during operation. Data centres must continuously remove this heat to avoid hardware damage. Cooling systems, therefore, consume a significant share of total electricity use in a data centre – often around 38 to 40 percent.
For major technology firms such as Microsoft, Amazon and Google, the competition in artificial intelligence increasingly depends on access to stable, inexpensive and abundant electricity. In this sense, the race for AI capability is also a race for energy.
The GCC position
The growing energy demand of AI infrastructure has increased the strategic relevance of the Gulf Cooperation Council (GCC) states for American technology firms.
Countries such as Saudi Arabia and the United Arab Emirates combine several advantages: abundant energy resources, large sovereign wealth funds, and the administrative capacity to deploy large-scale infrastructure rapidly.
According to PwC estimates, artificial intelligence could contribute around $320bn to the Middle East economy by 2030, with the UAE and Saudi Arabia expected to capture a substantial share of this expansion.
The region has attracted international talent by offering competitive living standards at relatively lower costs than in many western economies.
By positioning themselves as alternative locations for large computing clusters, the GCC states allow US technology firms to circumvent grid bottlenecks and regulatory delays in North America and Europe.
In recent months, Nvidia, AMD and Microsoft have all struck major deals with Gulf sovereign wealth funds, with Saudi Arabia’s electricity prices running 30 to 50 percent below the global average.
The economic viability of these investments, however, depends on regional stability – and the tensions with Iran remain one of the key sources of instability.
The Iran factor
While the GCC can provide locations for energy-intensive infrastructure, Iran remains one of the largest untapped energy suppliers in the global system.
The country holds roughly 12 percent of the world’s proven oil reserves and the second-largest natural gas reserves, estimated at 34 trillion cubic metres.
The connection between these reserves and AI is indirect but economically significant.
AI expansion depends on cheap electricity, and electricity costs are strongly influenced by global oil and gas prices. Integrating Iranian energy more fully into global markets could increase supply and place downward pressure on those prices.
If sanctions were lifted or a more cooperative government emerged in Iran, the additional flow of hydrocarbons could lower global energy costs and, in turn, reduce the operating expenses of the massive AI clusters that US technology firms are deploying.
Instead, the opposite has happened. Since the war began on 28 February, Iran has controlled the Strait of Hormuz, the narrow waterway through which roughly 20 percent of the world’s seaborne oil and liquefied natural gas passes.
Using missiles, drones, mines and satellite jamming, Iran has locked out western-affiliated shipping while allowing vessels from China, Russia, India and Pakistan selective passage. At least 17 ships have been attacked and oil prices have risen above $100 a barrel – a direct consequence of the disruption to one of the world’s most critical energy routes.
Iran’s military has warned that any military vessel approaching the strait would be treated as a violation of the ceasefire, set to expire on 22 April, with no new talks scheduled.
Meanwhile, the US naval blockade further raises the prospect of prolonged energy market disruption.
What is emerging at Hormuz is not simply a military stand-off but a contest over who controls global energy flows – and by extension, who bears the cost of powering the AI economy.
Statements by figures such as US President Donald Trump suggesting a role for Washington in shaping Iran’s political future illustrate how closely debates over regime change can intersect with broader strategic and economic interests.
The economics of war
The economic dimension of the conflict has been made explicit by some policymakers in Washington.
For example, in a recent interview with Fox News, US Senator Lindsey Graham argued that removing Iran’s current leadership would transform the regional balance and generate substantial economic gains for the United States.
“When this regime goes down, we are going to make a tonne of money,” he said, linking the outcome of the war to potential access to major oil reserves in Iran and Venezuela. He added that a partnership over these resources would represent “China’s nightmare”.
Such statements highlight how the conflict is sometimes framed not only in security terms but also in economic and technological ones.
By strengthening its position in the Gulf and potentially expanding access to Iranian hydrocarbons, Washington could reinforce the energy base required for the rapidly expanding AI sector.
This logic also echoes arguments made by figures such as JD Vance, who has emphasised the need for “reliable power plants” to sustain the United States’s position in the global AI race.
In this emerging landscape, the Middle East’s traditional role as an oil and gas supplier intersects with a new technological competition. The data centres that power artificial intelligence ultimately depend on electricity, and electricity depends on energy resources.
Consequently, the geopolitics of oil and gas remain closely connected to the geopolitics of computation.
Whether the current confrontation ends in a negotiated settlement or a prolonged stand-off, its consequences for global energy markets – and for the AI infrastructure that depends on them – will be felt well beyond the region.
The Strait of Hormuz has become not only a military flashpoint but an energy chokepoint whose control shapes the economics of the next technological era.
Source: MEE
