US-Iran Escalation: The Rising Risks to Middle East Projects and Investments
The recent geopolitical escalation has prompted several to keep a watchful eye on future plans in the region or reconsider their ongoing plans.
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Six days after U.S.–Israeli forces struck Iran—an escalation that is widening into a broader regional conflict involving several Middle Eastern countries—technology companies are facing growing uncertainty around their regional operations, particularly those tied to the AI value chain.
With the region, particularly Saudi Arabia and the United Arab Emirates, positioning itself as a key player in data centres in recent years, many companies, including Amazon Web Services, Hexagon, OpenAI, Microsoft, Oracle, Nvidia, Qualcomm, and Cisco, have invested in massive projects.
However, the recent geopolitical escalation has prompted several to keep a watchful eye on future plans in the region.
At least three AWS data centers, two facilities in the UAE and a third in Bahrain, were reported damaged by Iranian drone strikes.
The targeting wasn’t a random act, but a strategic move with AI being touted as the new oil. Data centres require billions of dollars in investment, making them prime targets to cripple business infrastructure.
Several key industries are facing immediate operational and financial uncertainty, largely due to the effective closure of the Strait of Hormuz, a key artery to the world’s oil and LNG supply.
Container shipping groups A.P. Moller-Maersk and Hapag-Lloyd announced the suspension of their routes to and from the Middle East. “Following our latest risk assessment and operational review and considering the escalating conflict affecting safe navigation in the Gulf region, we have made the decision to temporarily suspend the FM1 service (connecting Far East to Middle East) and the ME11 service (connecting Middle East to Europe),” Maersk said.
The financial and logistical troubles for the aviation industry are compounding by the day, with the number of cancelled flights to the Middle East surpassing 27,000 since February 28.
Of the 51,600 scheduled flights to or from the Middle East since February 28, more than half have been cancelled, according to analytics firm Cirium Ltd.
Air France suspended flights to and from Dubai, Riyadh, Tel Aviv, and Beirut. KLM Royal Dutch Airlines suspended the remainder of its winter-season flights to and from Tel Aviv, as well as flights to and from Dammam, Riyadh, Saudi Arabia, and Dubai.
British Airways suspended service to Abu Dhabi, Amman, Bahrain, Doha, Dubai, and Tel Aviv.
Companies are also left worrying about volatile energy costs. Oil and gas price swings are expected to raise electricity expenses for data centres, potentially slowing tech firms’ investments.
Exxon Mobil, TotalEnergies, and Shell are among the companies with more exposure to disruptions in oil and gas production due to the U.S.-Israel war with Iran, analysts said, as reported by Reuters.
Jefferies analysts estimate that the Middle East accounts for 29% of TotalEnergies’ total production, versus 20% for Exxon and 20% for Shell.
With logistics stalled, flight paths cancelled, and physical infrastructure under fire, the global tech industry is at a crossroads.
“The overall momentum for AI investment is likely to remain intact, but the concern is that the pace of investment could slow,” shared an industry official with The Korea Times. “Rather than immediate risks to production or supply, companies may need to focus more on managing broader risks surrounding AI infrastructure.”
A prominent project is Stargate UAE, OpenAI’s first international deployment of its AI infrastructure platform, announced in May 2025. Forged in association with G42, Oracle, NVIDIA, Cisco, and SoftBank, the project aimed to build a 5GW, 26-square-kilometre cluster in Abu Dhabi with 200MW expected to go live in 2026.
South Korea joined Stargate UAE’s project in November 2025, with Samsung Electronics and SK Hynix likely to be the memory suppliers.
