AI vertical among those most exposed to Middle East conflict

AI, which has become a key driver of air cargo demand, is among the verticals most exposed should the Middle East conflict continue into next year, according to a major study.

In its latest Economic Outlook, the Paris-headquartered Organization for Economic Cooperation and Development (OECD), a global policy forum who membership totals almost 40 industrialized countries, lays out a ‘prolonged disruption scenario’.

This assumes that the current disruptions to energy production and exports in the Gulf economies persist well into 2027, with higher energy prices, intensifying risks of supply shortages and a tightening of global financial conditions, all of which carry broader and more long-lasting consequences for the global economy.

‘Specialized Inputs from Gulf Economies’

The OECD noted that the shortages could be particularly damaging for certain growth industries in the global economy, such as AI. The significant energy price shocks or energy shortages associated with the prolonged disruption scenario would increase data centre operating costs and constrain the supply of critical hardware used in AI systems.

The manufacture of key components, most notably semiconductors, depends heavily on energy and petrochemical-intensive processes that rely on imported feedstocks and specialized inputs from the Gulf economies.

A further increase in national export restrictions for essential products in short supply would add to the uncertainty and intensify the impact of prolonged supply disruptions and energy shortages.

Furthermore, longer-lasting closure of gas production facilities and trade through the Strait of Hormuz would reduce the availability of other commodities used intensively in the manufacture of AI-related inputs, such as helium.

These effects could further reduce the capacity and incentive for AI investment, leading to notably weaker growth in those economies currently being boosted by AI-related investment and production.

‘Biggest Growth Engine of Air Freight’

Speaking at a webinar earlier this year, Henk Venema, DHL Global Forwarding’s (DGF) EVP, Global Airfreight, described hyperscale AI as “probably the biggest growth engine of air freight overall in 2026 and beyond.”

It comprises the transport of highly scalable computing infrastructure, including large-scale data centers, powerful processors, and vast networks to build, train, and run complex AI models.

“There is a huge volume of demand coming out of what we call the VTT countries – Vietnam, Thailand, and Taiwan, mainly going into the Midwest and Central US for the build-up of data centers and data parks, but which is also destined for other markets. This vertical is expected to continue its high growth rate and eat up a lot of air freight capacity this year.”

The OECD noted that AI hardware components are “heavily traded across borders”, meaning that a spike in trade costs could impact associated value chains. For example, when Houthi militants in Yemen began attacking commercial vessels at the southern entrance of the Red Sea at the end of 2023, shipping costs surged and delivery times rose, including for construction materials used in data centers.

In addition, the escalation of the conflict may negatively impact large-scale AI infrastructure projects in the Middle East, including multigigawatt data center campuses, which are closely linked to sovereign wealth funds and state-backed capital. Prolonged geopolitical tensions could delay or halt these projects.

Ocean and Air Freight Hikes

The OECD also highlighted that in the three months or so since hostilities began, freight rates have risen, particularly for goods travelling into or transiting through the Middle East, reflecting higher war risk insurance premia, and the costs of offloading cargo at unscheduled stops.

Rising jet and ship fuel prices have contributed to global ocean freight rates rising about 45% above the levels just before the conflict, and global air freight rates rising almost 30%. Global bottlenecks may reflect landside congestion rather than generalized issues with sea routes, with ship congestion concentrated in ports around the Persian Gulf.

Hormuz Now Epicenter of Conflict

Given the escalation in the conflict this week, threatening the fragile US-Iran ceasefire – there have been reports of Iranian drone attacks on Kuwait's international airport and US strikes on an Iranian oil tanker and Qeshm Island - the OECD’s ‘prolonged disruption scenario’ appears all the more likely.

Re-opening of the Strait of Hormuz, now at the epicenter of the military conflict, is arguably as far away as ever.

For Iran, the waterway is a powerful economic weapon which it is exploiting to the hilt and also a tremendous source of leverage in its negotiations with the US to end the war.

‘Tehran Toll’

“The Strait of Hormuz remains a core matter of contention,” according to the International Crisis Group, a Brussels-based non-profit NGO.

“Iran has been working on converting wartime interdiction and disruption into a permanent regime. Over the past week, roughly two dozen vessels a day purportedly transited under the Islamic Republic’s Revolutionary Guard -issued permits, submitting to Tehran’s designated routes and fees. Iranian officials claim that ‘Iranian management’ of the strait – under the so-called Persian Gulf Strait Authority (PGSA) – is now an established global fact and that Oman will help administer it.”

Writing in UK newspaper, The Telegraph, recently, Tom Sharpe, who served for 27 years as a Royal Navy officer, said Iran is slowly imposing a formal system a formal system of tolls in the Strait.

“Through checkpoints, ship vetting, diplomatic side-deals and explicit security fees – the Tehran Toll – the Iranian leadership is turning one of the world’s most critical energy chokepoints into a pay-to-use gateway.”

He added, somewhat pessimistically: “The issue remains that driving the Iranian threat down to a level required for shipping to move again – basically zero – has been, and will be again, very hard to achieve.”

The US Treasury Department has already sanctioned the PSGA, signaling that Washington will not accept the institutionalization of Iranian control over the strait, whether or not it involves transit fees.

The US imposed a naval blockade on Iran in April, and President Trump’s strategy focuses on suffocating Iran’s economy, forcing the regime into submission.

Meanwhile, the US military also continues to “quietly guide” commercial vessels through the Strait of Hormuz – although the 70-some ships that the US has reportedly helped guide to date are a small fraction of the pre-war traffic of well over 100 vessels a day.

Repercussions of Stalemate ‘Real and Growing’

With the waterway still largely blocked, the economic repercussions of the continued stalemate are real and growing. The heads of the International Monetary Fund, World Bank, and International Energy Agency have jointly warned of a summer fuel ‘crunch’ if the Strait remains closed.

The ICG underlined that much of Iran’s and the Gulf Arab states' food imports go west after transiting Hormuz, while a sizeable portion of the world’s energy, fertilizer and other essential commodities go east.

A prolonged disruption of this flow could have serious consequences around the globe, from spiking transportation costs and fuel shortages to widespread food insecurity as a fertilizer crunch hits during more of the world’s staple food planting seasons. Manufacturing of all kinds could also soon suffer from input scarcity.