How Oil Shocks & Strikes Snuffed the Gulf’s Data Centre Plan

The recent drone strikes on three Amazon Web Services facilities in the United Arab Emirates and Bahrain have not only frozen progress in the region’s ambitious AI programme but also disrupted critical energy-linked services.

Since airstrikes began on 28 February, Amazon confirmed that two UAE data centres were directly hit and one in Bahrain was damaged by a nearby blast. The strikes cut power flows, sparked fires and caused flooding that will require “prolonged” repairs.

Iran’s Islamic Revolutionary Guard Corps claimed responsibility, arguing that the sites were aiding “military and intelligence activities.” The move shows how deeply the region’s energy and digital networks are now intertwined with geopolitics.

Reports suggest the US is deploying Anthropic’s Claude AI in its operations, while Palantir CEO Alex Karp has said his company’s tools provide the US with an “edge” in conflict planning.

Across Dubai and Abu Dhabi, civilians faced blackouts in the digital sense: taxi apps, food delivery platforms and mobile banking all went offline, exposing how cloud downtime can ripple through energy-reliant urban economies.

“Data centres are a critical building block of AI capabilities at the national level,” says Vincent Boulanin, Director of the Governance of AI Programme at the Stockholm International Peace Research Institute.

Power, politics and the price of energy

The war spanning Iran, the US and Israel has erupted at a moment when Gulf states are positioning themselves as low-cost, high-energy hubs for data and AI infrastructure.

According to Data Center Map, there are now 325 data centres across the Middle East. In 2024, the Gulf Cooperation Council’s market was valued at US$3.5bn, projected to reach nearly US$9.5bn by 2030 – a forecast based on electricity costs around US$0.05 per kWh, far below Western benchmarks.

This energy advantage, underwritten by hydrocarbon revenues, supports mega-projects such as a 5GW complex outside Abu Dhabi – one of the world’s largest planned AI campuses. Yet ongoing conflict has knocked those assumptions.

Attacks on regional assets have already choked the Strait of Hormuz, disrupting crude exports and threatening energy supply chains that deliver roughly a fifth of global oil and gas. As Brent crude continues to spike, the notion of endless, cheap energy fuelling AI and cloud expansion looks far less secure.

The energy risk shadowing cloud infrastructure

The physical security of data centres has always mattered — but wartime strikes show how power reliability is now an existential risk for digital infrastructure.

“Most data centres have ‘robust’ protection on the ground, but few had considered the threat of state-level air strikes before these attacks,” says James Shires, Co-Director of the UK think tank Virtual Routes.

While AWS groups facilities into “availability zones” to maintain redundancy, energy supply remains the backbone. When multiple sites suffer direct strikes or sustained power loss simultaneously, even the most redundant architecture struggles to cope.

“If we’re going to have large-scale data centres built out in the Middle East, we’re going to have to get pretty serious about how we protect them,” James adds.

Defending energy-driven digital infrastructure

One emerging proposal is to treat data centres as part of critical energy infrastructure, integrating missile defence systems to shield them. Some compare this to Israel’s Iron Dome model.

The US is looking into a similar concept – a nationwide defence shield, the so-called “Golden Dome” – though the idea is still in early stages.

Sean Gorman, CEO of Zephr.xyz and a US Air Force contractor, believes Tehran’s tactics mirror Russia’s strategy in Ukraine, where hitting energy and communications targets was used to destabilise civilian systems.

“UAE and Bahrain have both been positioning themselves as global AI hubs by investing heavily in datacentres and fibre infrastructure,” Sean says. “If they can disrupt that infrastructure, it puts their strategic position under risk while also disrupting operations that are important to the economy.”

He adds that beyond drone strikes, the Gulf must prepare for threats to undersea cables landing at Fujairah – a narrow chokepoint linking local energy-backed data hubs to global networks.

Investment horizons shorten as uncertainty grows

The current wave of airstrikes lands just as the UAE’s digital infrastructure market is expanding. Analyst firm Mordor Intelligence estimates roughly 35 data centres are operational in the country, many hosting workloads from global AI developers such as OpenAI and Microsoft.

“Investment in data centres is designed with a very long time frame, and any event like this increases the risk of that investment,” James says. “It really puts into jeopardy the cloud and AI strategies of the Gulf economy in a really worrying way.”

Legal and diplomatic questions compound the uncertainty. International law protects civilian infrastructure unless it directly supports military objectives. Vincent notes it is “very likely in this case that it was a pure civilian infrastructure and therefore that it was unlawful to target that centre.”

What’s now clear is that the Gulf’s digital transformation rests on the same energy networks that make it both a strategic asset and a target. The line between energy resilience and data resilience has never been thinner.