Iran War Could ‘Crimp’ AI Boom - WTO

High oil prices may stymie the spread of power-hungry AI.

A sustained period of high oil prices from the war in Iran could slow the energy-intensive AI boom, the World Trade Organization's chief economist has said.

The Israel/U.S.-led war in the Middle East has already spiked the price of oil up by more than 50 percent, and 100 percent for liquid natural gas (LNG), with knock-on effects on goods prices worldwide.

That’s because Iran controls the Strait of Hormuz, the only water route between the Persian Gulf and the open ocean. About 25 percent of the world’s seaborne oil and 20 percent of LNG is shipped through the Strait, and its closure has long been part of Iran’s defensive strategy.

Artificial intelligence is a revolutionary but energy-hungry technology, and datacenters are increasingly turning to fossil fuels to fill their immediate needs. At best estimates, datacenters consumed about 1.5 percent of global electricity in 2024, and AI inside datacenters (discounting edge devices) around 0.23 percent. The figure will have risen since then.

That hunger for power is what led the WTO’s chief economist, Robert Staiger, to say, “If the price of energy continues to be elevated for the whole year, that could put a crimp on the AI boom.”

He added a warning note about AI investment, too, saying, “Because that investment is very concentrated in a number of very large firms, and the technology is still ultimately unproven in terms of how much it can deliver, there is a bit of uncertainty there in terms of where the future’s going.”

The WTO’s latest calculation is that as much as 70 percent of all investment growth in North America touched AI-related goods in the first three quarters of last year. By contrast, property made up about 30 percent of investment growth in the three years preceding the 2008 financial crash.

World trade is currently performing well, growing about 4.6 percent in 2025 despite Donald Trump’s tariffs. However, it expects growth to slow this year: to 1.9 percent pre-war, and now as low as 1.4 percent if high energy prices continue for a year or more.

This article originally appeared on MES Computing’s sister site Computing.