Middle East Conflict Threatens AI Boom Through Energy Price Surge

Escalating tensions in the Middle East are casting a shadow over the burgeoning artificial intelligence (AI) sector, with the potential for sustained high energy prices posing a significant risk to its continued growth. The World Trade Organization (WTO) has warned that a prolonged period of elevated energy costs could “crimp” the AI boom, which has been a key driver of investment and economic activity.

Energy-Intensive AI and Global Trade

The WTO’s latest Global Trade Outlook identifies the war’s impact on energy and fertilizer costs as the primary risk to the global economy. The report highlights a potential interaction between the Middle East conflict and the AI boom, noting that AI is a particularly energy-intensive industry. If energy prices remain high throughout the year, it could significantly hinder AI investment.

Robert Staiger, the WTO’s chief economist, emphasized the concentration of AI investment within a small number of large firms and the unproven nature of the technology’s long-term delivery potential, adding to the uncertainty. He stated that the AI boom helped offset the negative impact of Donald Trump’s tariffs on global trade in 2025.

Investment Trends and Economic Impact

In the first three quarters of 2025, approximately 70% of all investment growth in North America was attributed to AI-related goods, according to the WTO. This contrasts sharply with the period leading up to the 2008 US housing crash, where property accounted for only 30% of investment growth.

Despite the implementation of protectionist policies and increased US tariffs, world trade in goods expanded by 4.6% in 2025, largely due to strong export performance from Asian economies. Still, the WTO anticipates a slowdown in global goods trade growth to 1.9% in the current year, even without a prolonged energy shock.

Potential for Further Economic Disruption

The WTO estimates that a year-long period of high energy prices could further reduce goods trade growth by an additional 0.5% and jeopardize global food security. The Gulf region’s role as a major exporter of both energy and fertilizers means that a prolonged supply interruption could have widespread repercussions across food systems, exacerbating existing export restrictions.

The organization likewise noted that risks to the forecast are “tilted to the downside,” primarily linked to the Middle East conflict through higher energy prices, which could negatively impact output and trade unless resolved quickly.

WTO’s Role and US Trade Policy

The WTO has faced challenges in maintaining its relevance during Donald Trump’s second term, as the US president has continued to impose tariffs despite the organization’s rules. Several economies have also deviated from their commitments in trade deals with Washington.

Key Takeaways

• The Middle East conflict poses a significant risk to the AI boom due to potential energy price increases.
• AI investment was a major driver of economic growth in North America in 2025, accounting for 70% of investment growth.
• Prolonged high energy prices could reduce global goods trade growth and threaten food security.
• The WTO faces ongoing challenges related to US trade policy and adherence to international trade rules.