The Gulf’s AI Boom Hits an Undersea Cable Snag

The Gulf’s multibillion-dollar bet on artificial intelligence is running into an unexpected bottleneck: a handful of undersea cables threading through some of the world’s most dangerous waterways. As Saudi Arabia and the UAE pour massive investments into AI infrastructure, attracting hyperscalers and positioning themselves as future exporters of compute capacity, the physical backbone carrying that data is emerging as a critical strategic vulnerability.

For decades, undersea cables have quietly powered global internet connectivity. Now, they are being reclassified as geopolitical assets. Following heightened tensions between the US, Israel, and Iran earlier this year, experts warned that regional conflict could directly threaten these vital links. In May, unconfirmed reports suggested Iran was considering taking control of all seven cables running through the Strait of Hormuz, a chokepoint that handles roughly a fifth of the world’s oil transit and now, increasingly, its data.

These cables carry an estimated 95 percent of all international data traffic. For the Gulf, the core problem is concentration. Much of the region’s connectivity to Europe and the US still depends on just a few routes through the Red Sea and the Strait of Hormuz. The Middle East sits at the crossroads of Europe, Asia, and Africa, making it one of the world’s most strategically important transit zones for global internet traffic.

A single damaged cable today does more than slow down Netflix. It could fundamentally undermine the Gulf’s entire emerging AI business model. In many ways, these countries are attempting to transform energy wealth into digital infrastructure,exporting compute power and cloud capacity much like they once exported hydrocarbons. For economies gearing up to become large-scale exporters of compute capacity, the importance of and reliance on these cables is growing exponentially, especially as the hyperscale companies setting up shop demand higher-than-ever resilience.

Unlike traditional internet traffic, AI workloads rely on massive, continuous data flows between hyperscale data centers, cloud providers, and enterprise customers. Even brief disruptions can create significant operational and financial consequences, making resilient fiber infrastructure a commercial necessity rather than an afterthought. “Hyperscalers and regional carriers are pushing diversification because their requirements have moved beyond bandwidth,” says Imad Atwi, partner at consulting firm Strategy& Middle East. “They now need multiple independent paths, predictable latency, and survivability during geopolitical stress.”

The pressure is already mounting. In 2025, two cables linking Europe to the Middle East and Asia were cut in the Red Sea, degrading internet connectivity across the Gulf for days and causing an estimated $3.5 billion in damages from lost services. That incident occurred before the AI rollout had fully accelerated and data centers started coming online. Now, hyperscalers are demanding the same resilience standards in the Middle East that they already rely on across transatlantic and transpacific routes,markets that typically operate across four or five physically separate network paths to minimize disruption risks. The Gulf, by comparison, remains heavily dependent on a narrow concentration of routes.

“Hyperscalers now want similar route diversity across the Middle East, both for Gulf-Europe connectivity and for Europe-Asia traffic transiting the region,” says Bertrand Clesca, partner at subsea cable specialists Pioneer Consulting.

For years, proposed terrestrial and subsea routes across the Middle East struggled to move forward because of regulatory barriers, political instability, and regional conflict. Now, many of those same corridors are being reconsidered as critical digital infrastructure. Atwi describes a multilayered strategy emerging across the Gulf. The first layer involves Gulf landing stations connected through terrestrial fiber corridors spanning Saudi Arabia, the UAE, and Oman, then extending towards Europe and Asia through Jordan and the Levant. A second layer would introduce new subsea-terrestrial systems bypassing chokepoints around Egypt and Bab el-Mandeb. A third would create northern overland corridors through Iraq, Syria, and Turkey.

Some of the region’s most ambitious projects involve countries previously viewed primarily through the lens of conflict. Terrestrial systems, like one proposed via Syria, can support up to 144 fiber pairs compared to the 24 typical in today’s subsea cables, meaning the capacity potential is enormous. The downside is they are above ground, making them much more vulnerable to physical disruptions. This is not an abstract risk.