The escalating conflict in the Middle East is casting a shadow over the burgeoning artificial intelligence (AI) sector, with the World Trade Organization (WTO) warning that sustained high energy prices could “crimp” the AI boom. The warning came as part of the WTO’s latest Global Trade Outlook, which identified the war and its impact on energy and fertiliser costs as the primary risk to the global economy.
While AI investment helped offset the negative impact of Donald Trump’s tariffs on global trade in 2025, the WTO’s chief economist, Robert Staiger, cautioned that the energy-intensive nature of AI development makes it vulnerable to prolonged high energy prices. “If the price of energy continues to be elevated for the whole year, that could put a crimp on the AI boom,” Staiger said. He further noted the concentration of investment in a modest number of large firms and the unproven nature of the technology as contributing factors to the uncertainty.
The WTO calculated that approximately 70% of all investment growth in North America during the first three quarters of last year was attributable to AI-related goods. This level of concentration contrasts sharply with the period leading up to the 2008 financial crisis, when property accounted for only 30% of investment growth.
Despite the imposition of significant tariffs by the Trump administration – reaching their highest levels in decades – global goods trade expanded by 4.6% in 2025, driven by strong export performance from Asian economies. However, the WTO anticipates a substantial slowdown in the growth rate of global goods trade this year, projecting a figure of 1.9% even without a prolonged energy shock.
A year-long period of elevated energy prices, according to the WTO, could further reduce goods trade growth by an additional 0.5% and jeopardize global food security. The organization highlighted the vulnerability of food systems, given the Gulf region’s role as a major exporter of both energy and fertilisers, and warned that prolonged supply disruptions could exacerbate existing export restrictions.
The conflict’s impact on energy markets is already being felt, with global oil prices spiralling, according to reports from the Middle East. President Trump has publicly called on countries, including China, to help secure the Strait of Hormuz, a critical waterway for global oil transport. He has as well “demanded” that seven countries reliant on Middle East oil join a coalition to police the strait, though he suggested on March 16th that the US “shouldn’t even be there at all” and possesses sufficient domestic oil reserves.
The US President’s approach to international trade and diplomacy has presented challenges to the WTO’s relevance. The organization has struggled to assert its authority as Trump has continued to implement tariffs irrespective of WTO rules, and as other economies have deviated from their commitments in agreements with Washington. Trump’s planned visit to China on March 31st, initially described as “a wild one,” has been postponed, with the President citing the need to remain in Washington “because of the war.”
The United States was in discussions with Iran as of Sunday, March 16th, but President Trump indicated that Tehran was not yet prepared to reach a deal to end the conflict. Meanwhile, fighting and aerial attacks continue throughout the Middle East, and Israel has conducted airstrikes on Tehran.
Leave a Reply