Conflict at the Doorstep: What Israel–Iran Tensions Mean for Gulf Cloud Infrastructure”

Geopolitical tensions between Israel and Iran are reshaping the Gulf's cloud infrastructure landscape. Here's what you need to know:

• Cyber Threats: Iranian-backed hackers target GCC nations like the UAE, Saudi Arabia, and Qatar, impacting hyperscale data centres, colocation facilities, and edge computing sites.
• Physical Risks: Key infrastructure, such as the Strait of Hormuz and energy facilities, faces disruption risks due to escalating conflicts.
• Supply Chain Issues: Rising costs and delays in hardware imports, coupled with labour mobility challenges, are straining operations.
• Investment Trends: A shift towards resilient, green data centres is underway, driven by sustainability goals and energy security concerns.
• Cybersecurity Focus: Operators are adopting Zero Trust Architecture, AI-powered threat detection, and enhanced API security to counter growing risks.

Quick Comparison: Data Centre Risks in the GCC

Key Takeaway: To thrive amidst these challenges, GCC operators must prioritize resilience, adopt multi-cloud strategies, and invest in cybersecurity. This approach ensures operational continuity in a volatile geopolitical environment.

Geopolitical Risks to Gulf Cloud Infrastructure

The ongoing Israel–Iran conflict poses a significant threat to the Gulf Cooperation Council (GCC)'s cloud infrastructure. These risks go far beyond typical cybersecurity concerns, touching on supply chain disruptions, operational hurdles, and strategic vulnerabilities that could reshape the region's digital future. Below, we break down the specific risks tied to digital infrastructure, architectural setups, and operational frameworks within this context.

Digital Infrastructure Threats from Regional Conflicts

Iranian-linked Advanced Persistent Threat (APT) groups have intensified their focus on Middle Eastern infrastructure. For instance, APT34 targets critical government and infrastructure systems, while APT35 carries out long-term campaigns against similar organisations. Another group, CyberAv3ngers, has been known to exploit internet-connected systems like programmable logic controllers (PLCs) and human-machine interfaces (HMIs). A case in point: in November 2023, CyberAv3ngers reportedly attacked several water and wastewater facilities in the United States by exploiting default-secured internet-connected devices. Companies within Middle Eastern nations that have backed Israel's actions may find themselves at heightened risk, as these APTs expand their tactics to include spearphishing and drive-by compromise attacks.

The financial stakes are also climbing. According to IBM, the cost of data breaches in the MENA region reached US$8.07 million in 2023, marking an 8.2% rise. Cross-border data flows are particularly vulnerable during periods of geopolitical tension - whether from wars, terrorist activities, or strained bilateral relations - which can disrupt international trade and communication. With the region's digital economy expected to grow from US$180 billion in 2022 to US$780 billion by 2030, the potential cost of such disruptions could be immense.

Risk Comparison: Hyperscale, Colocation, and Edge Data Centres

The level of geopolitical exposure varies significantly depending on the type of data centre architecture deployed across countries like the UAE, Saudi Arabia, and Qatar. Here's how the risks stack up:

Hyperscale data centres are especially attractive to threat actors because of their concentration of critical infrastructure and valuable data. While these facilities often employ advanced security measures, their strategic importance makes them prime targets for sophisticated cyberattacks. Colocation facilities face challenges in maintaining consistent security standards, while edge computing sites, though more resilient due to their distributed nature, present a wider attack surface that is harder to monitor and secure effectively.

Adding to these challenges, operational technology (OT) systems demand regular updates, secure credentials, and frequent scans of internet-facing endpoints to ensure their security.

Data sovereignty introduces another layer of complexity. As Harish Dunakhe, Senior Research Director for Software and Cloud at IDC, explains:

"Digital sovereignty is a key driver... This ensures that the control over data and operations remains within the country's boundaries, crucial in mitigating risks associated with geopolitical conflicts and cybersecurity concerns."

• Harish Dunakhe, Sr. Research Director (Software and Cloud), IDC

The regulatory environment across the GCC further shapes the design and operation of cloud infrastructure. For example, the UAE's Personal Data Protection Law (PDPL) and Saudi Arabia's Cybersecurity Regulation and Control Framework (CCRF) play significant roles in guiding infrastructure requirements. However, these regulations can also introduce vulnerabilities if not carefully managed.

Supply Chain and Operations During Regional Instability

Regional conflicts have a direct impact on GCC data centres, particularly by putting pressure on supply chains. The ongoing tensions between Israel and Iran highlight vulnerabilities in areas like hardware procurement and workforce management. These challenges emphasise the importance of having solid strategies for supply chains and workforce operations.

Hardware Import and Labour Mobility Disruptions

The Strait of Hormuz plays a critical role in GCC data centre operations, as it facilitates nearly 30% of the world's oil trade. Any escalation in this region can lead to delays in hardware shipments and increased energy costs, affecting data centres in the UAE, Saudi Arabia, and Qatar.

Supply chain disruptions are already being felt, especially in the region's rapidly growing data centre market. Delays in acquiring essential components like advanced cooling systems, GPUs, and AI chips are slowing down deployments. Financially, the impact is clear. The Data Centre Cost Index revealed a 9% rise in costs in 2024, compared to a 6% increase the previous year. Gregory Daco, EY-Parthenon’s chief economist, highlighted the broader risks:

"This scenario could lead to a sharp increase in oil prices and potentially trigger significant inflationary pressures and global supply chain issues."

Labour mobility is another concern. Many GCC data centres rely on international expertise for specialised roles, and regional instability can restrict the movement of these skilled technicians. Additionally, rising energy prices further strain operating budgets during such periods of unrest.

Supply Chain Localisation and Multi-Cloud Strategies

To address these vulnerabilities, operators are focusing on diversifying their supply chains and adopting flexible cloud strategies. Today, 87% of enterprises use multi-cloud setups, while 73% favour hybrid-cloud models. The multi-cloud management market, valued at US$8.6 billion in 2023, is expected to grow to US$50.04 billion by 2030. On average, organisations are using 2.6 public clouds and 2.7 private clouds to meet their needs.

Some companies have already demonstrated the effectiveness of multi-cloud strategies. For example, JPMorgan Chase adopted a multi-cloud approach in 2025, leveraging AWS for analytics and Google Cloud for machine learning, while Johnson & Johnson utilised Azure for secure data storage and analytics alongside AWS for research and development workloads. Arvind Joshi, CFO and COO at JPMorgan Chase, stressed the importance of collaboration in such strategies:

"A multi-cloud approach requires deep collaboration. Technologists should work with their business counterparts to design and implement effective cloud strategies, with business needs dictating the architecture and capabilities."

To build resilience, GCC operators are increasingly turning to the following measures:

• Automation: Streamlining IT processes to reduce errors and improve response times.
• Remote Management: Using remote tools to maintain infrastructure when on-site access is limited.
• Skills Development: Focusing on training local talent and diversifying workforce locations to reduce dependency on foreign workers.

The financial rewards of these strategies are evident. For instance, in 2025, Airbnb reduced storage costs by 27% by optimising its AWS usage. Similarly, Salesforce used CloudHealth by VMware to gain better insights into multi-cloud expenses, improving cost management and operational efficiency. Strong vendor relationships also play a crucial role, with 69% of enterprises avoiding vendor lock-in by working with multiple cloud providers, and nearly one-third using four or more platforms to address specific business needs.

Cybersecurity Threats and Infrastructure Protection

The ongoing tensions between Israel and Iran have amplified cybersecurity risks for cloud infrastructure across the GCC region. With conflicts escalating, data centres in the UAE, Saudi Arabia, and Qatar are increasingly targeted by Iranian state-sponsored hackers, raising concerns over the security of critical systems.

Cyber Threats to Critical Infrastructure

Cybersecurity threats have become more sophisticated, especially as supply chain vulnerabilities persist. In October 2024, cybersecurity agencies such as CISA, FBI, NSA, and their counterparts in Canada and Australia issued a joint alert about growing threats from Iranian cyber groups. These groups have focused on critical sectors like healthcare, energy, government, IT, and engineering, emphasising the need for heightened security measures.

Data centres in the GCC are particularly at risk due to their strategic importance and proximity to geopolitical hotspots. Iranian cyber actors have a history of targeting vital infrastructure. For instance, in 2019, the UAE's state oil company ADNOC and other essential assets experienced cyber disruptions attributed to regional threat actors.

John Hultquist, chief analyst at Google's Threat Intelligence Group, explains the shifting nature of these threats:

"Iranian cyber activity has not been as extensive outside of the Middle East but could shift in light of the military actions."

The financial toll of cyber incidents in the GCC is substantial. The average cost of a cyberattack in the region is US$6.93 million, significantly higher than the global average of US$4.24 million. In response, Saudi Arabia plans to invest US$2 billion in 2025 to bolster its cybersecurity infrastructure. Past incidents underline the stakes: in 2017, TRISIS malware attacks caused shutdowns at a petrochemical plant in Saudi Arabia, and in 2021, Saudi Aramco faced a US$50 million ransom demand after sensitive data was leaked by third-party contractors.

Jason Healey, a senior research scholar at Columbia University, highlights the broader implications of these risks:

"There is now a land war in Europe and another major conflict in the Middle East. Certain nation states may decide to let loose their cyber forces, consequences be damned."

These evolving threats call for advanced and proactive defence strategies, which are explored below.

Data Centre Security Best Practices

To address these challenges, GCC operators are implementing comprehensive security measures. A key focus is cyber resilience - the ability to withstand, respond to, and recover from cyber incidents while maintaining business continuity. Many organisations are adopting a Zero Trust Architecture, which requires strict identity verification through multi-factor authentication and continuous monitoring. Network segmentation is also being used to minimise the spread of threats within systems.

Advanced technologies are playing a critical role in enhancing security. AI-powered threat detection, agentless vulnerability assessments, and strengthened API security measures, such as robust authentication and continuous monitoring, are helping operators stay ahead of potential attacks. Integrated Security Operations Centres (ISOCs) are becoming standard, offering centralised monitoring and rapid response capabilities.

Modern cloud systems demand heightened API security, achieved through regular configuration reviews, strong authentication protocols, and continuous log analysis. These measures are essential for safeguarding sensitive data and maintaining system integrity.

The human factor remains a cornerstone of effective cybersecurity. Regular training for employees, combined with strict patch management, port scanning, and robust password policies, ensures that staff are equipped to handle emerging threats. Collaboration is also key - public–private partnerships and coordination within smart-city frameworks enable better information sharing and collective responses to cyber risks. Continuous monitoring through key performance indicators ensures that security measures adapt as threats evolve, providing a dynamic defence against an ever-changing threat landscape.

Investment Trends and Growth Strategies in GCC Cloud Infrastructure

The Gulf Cooperation Council (GCC) is witnessing a shift in investment trends, driven by the need for more resilient and sustainable cloud infrastructure. Geopolitical tensions, such as those between Israel and Iran, are influencing these investments, with resilience and sustainability becoming essential criteria for attracting capital.

Recent military developments have amplified market volatility. According to Saul Kavonic, Senior Energy Analyst at MST Marquee, the Israeli attack on Iran has sharply increased the risk premium, pushing Brent crude prices to $75.36 per barrel. This volatility highlights the importance of supply chain redundancies and has prompted a reassessment of traditional investment strategies in the region.

Investment Shift Toward Resilient and Green Projects

The combination of geopolitical instability and environmental priorities is spurring growth in sustainable data centre development. The Green Data Centre Market is expected to grow significantly, from $63.87 billion in 2024 to over $217.03 billion by 2032, with a compound annual growth rate of 18.5%. GCC governments are encouraging this transition by offering renewable energy incentives. The International Energy Agency has cautioned that global data centres could consume over 1,000 TWh of electricity by 2026.

A prime example of this trend is Masdar's 5.2GW solar PV project in Abu Dhabi, equipped with 16GWh of battery storage. This facility is designed to supply 1GW of renewable energy to the grid around the clock. Such projects ensure a stable and sustainable power supply for modern data centres, reducing reliance on traditional energy sources that could be affected by regional conflicts. Additionally, advanced cooling technologies, like adiabatic-free cooling chillers, are being deployed to optimise energy efficiency. The exploration of Small Modular Reactors (SMRs) further enhances reliability, offering scalable and efficient electricity generation during uncertain times.

These green initiatives are also reshaping site selection criteria, with a focus on aligning with regulatory frameworks and sustainability goals.

Site Selection and Regulatory Considerations

Digital sovereignty is becoming a central factor in infrastructure planning. Abu Dhabi's Digital Strategy 2025-2027 exemplifies this shift, allocating Dhs13 billion ($3.53 billion) to enhance local infrastructure and achieve 100% sovereign cloud adoption. Organisations are now prioritising redundancy in connectivity, diverse energy sources, and proximity to renewable energy facilities. Skilled local talent and regulatory stability also play a critical role in site selection. Public-private partnerships are emerging as key drivers of infrastructure development, with initiatives like Saudi Arabia's NEOM and UAE's AI projects paving the way for robust regulatory frameworks.

Regional Provider Growth Strategy Comparison

In light of these regulatory and infrastructural changes, regional cloud providers are rethinking their growth strategies. Ahmed Al Hammadi, Vice President of Cloud & Digital Infrastructure at e& enterprise, highlights the importance of adaptability:

"Our state-of-the-art facilities, robust connectivity and operational excellence allow businesses to scale without the complexities of building and managing their own data centres, enabling them to focus on growth and innovation".

Emerging providers are gaining market share by prioritising sustainability and flexibility over traditional scale-focused models. Hybrid cloud solutions, which combine public and private infrastructure, are particularly appealing during uncertain times, offering organisations the adaptability they need. The growing emphasis on sovereign AI is another area of opportunity. With only 32% of C-Suite executives in the GCC having fully implemented AI solutions, the potential for growth is substantial. Jean Salamat, a partner at Oliver Wyman, notes:

"The world is at a pivotal moment when it comes to AI - the GCC is meeting that moment thanks to strong investment, proactive regulation, and an early-adopter mindset. Watch this space today".

Local workforce development is also becoming a key differentiator. Providers are investing heavily in upskilling programmes and nurturing local talent to reduce reliance on international expertise - a critical factor during travel restrictions. The rise of GCC as a Service (GCCaaS) models is further enabling smaller organisations to access enterprise-grade infrastructure without significant capital outlays. This approach not only diversifies revenue streams but also reduces concentration risks for providers.

Conclusion: Building Resilience During Geopolitical Uncertainty

The escalating tensions between Israel and Iran serve as a stark reminder that geopolitical risks are no longer side issues for Gulf cloud infrastructure operators. As Atul Vashistha, Founder of Neo Group and Supply Wisdom, puts it:

"Resilience is no longer a competitive advantage, it's the license to continue operating".

This evolving landscape of cybersecurity threats and supply chain challenges is reshaping operational strategies. With 70% of Fortune 500 companies incorporating global capability centres into their innovation efforts - achieving efficiency gains of 25% - ensuring operational continuity has become a critical priority.

IT leaders need to overhaul their infrastructure planning to tackle the growing cyber risks. Organisations must integrate real-time risk intelligence into their governance systems. For instance, live risk dashboards can highlight policy changes, cyber vulnerabilities, and supply chain disruptions as they occur. Companies that adopt such tools have reported performance improvements of 30–50% and a 40% faster time-to-market.

Cloud operators, on the other hand, should focus on building systems that can adapt quickly to geopolitical disruptions. Embracing Zero Trust frameworks and automated risk modelling platforms allows for better simulation of potential disruptions and the development of dynamic Business Continuity Plans. Strengthening multi-cloud and edge computing strategies can reduce regulatory risks while maintaining flexibility. These measures not only enhance operational resilience but also pave the way for sustainable growth in the region.

The GCC's infrastructure investments, projected at US$2.65 trillion between 2018 and 2028, along with Saudi Arabia's commitment of over US$1 trillion to projects by 2030, present significant opportunities for those prepared to navigate the risks. Additionally, the drop in GCC equity risk premiums from 6.6% in 2016 to 2.4% by March 2025 signals a more favourable investment climate for informed stakeholders.

Niket Karajagi, Founder Director of Atyaasaa Consulting Private Limited, underscores this point:

"To navigate geopolitical tensions, Global Capability Centres must build agile, diversified operating models that balance geographic spread with strategic depth".

To thrive in this volatile environment, organisations must act now. This means applying risk-adjusted Total Cost of Ownership models, designing contracts and SLAs that account for conflict scenarios, and identifying backup locations or partners in advance. By embedding these strategies, businesses can not only withstand geopolitical turbulence but also turn resilience into a strategic advantage in an unpredictable world.

FAQs

How could rising tensions between Israel and Iran affect the security and stability of cloud infrastructure in the GCC region?

Geopolitical Tensions and Risks to Cloud Infrastructure in the GCC

The escalating tensions between Israel and Iran are raising alarms about the potential impact on the security and stability of cloud infrastructure across the GCC. These risks aren't just hypothetical - they're very real and multifaceted. One major concern is cyberattacks targeting critical data centres and digital supply chains. Such attacks could lead to service outages and jeopardise data security, causing widespread disruption. On top of that, there's the looming threat of physical attacks, such as sabotage or missile strikes, which often become more likely during periods of heightened conflict. These scenarios pose significant risks to the region's cloud operations.

To counter these challenges, organisations in key GCC nations like the UAE, KSA, and Qatar are taking proactive steps. They're focusing on resilient and diversified cloud strategies. This includes ramping up cybersecurity protocols, bolstering physical security measures, and exploring infrastructure options that offer geographical flexibility. These efforts aim to minimise potential disruptions and maintain operational stability, even in a volatile geopolitical climate.

How can Gulf cloud providers safeguard their operations against supply chain disruptions during regional conflicts?

Gulf cloud providers can build stronger resilience by expanding their supplier networks, sourcing resources from different regions, and avoiding over-reliance on any single external partner. This strategy reduces the risks tied to geopolitical uncertainties and supply chain disruptions.

Working together across borders and adopting region-focused strategies - like sharing resources and aligning demand - can further stabilise operations. By prioritising these steps, cloud operators in the region can navigate challenges more effectively and ensure consistent, dependable service even in unpredictable circumstances.

Why are green and resilient data centres becoming more important in the GCC, and how do regional tensions influence this trend?

The GCC is witnessing a rising focus on green and resilient data centres as sustainability takes centre stage in the region's agenda. With global climate goals shaping priorities, Environmental, Social, and Governance (ESG) factors are becoming key drivers for investment decisions. In response, GCC nations are turning to renewable energy and energy-efficient infrastructure to attract sustainable investments while minimising their environmental footprint.

Adding to this urgency are the region's geopolitical challenges, which have underscored the importance of energy security and robust infrastructure. By integrating renewable energy solutions and developing resilient data centres, GCC countries can not only safeguard operational continuity but also meet the surging demand for digital services fuelled by AI and digital transformation. This dual strategy strengthens infrastructure reliability and positions the region as a frontrunner in sustainable digital innovation.

Related posts

• The Hyperscaler Invasion: AWS, Google, Oracle, and Microsoft Redraw the GCC’s Cloud Map
• Best Practices for Cross-Data Center Replication in the GCC
• Top 5 GCC Data Center Locations Near Key Markets
• Top 7 Risks to GCC Data Center Supply Chains