When the US and Israel launched coordinated strikes on Iran on 28 February, the consequences for global energy markets were immediate and well-documented. What received considerably less attention was the knock-on threat to the digital infrastructure.

The conflict, now entering its second week, has for the first time in history closed both of the world’s critical maritime data chokepoints simultaneously. 17 submarine cables run through the Red Sea, carrying the bulk of internet traffic between Europe, Asia and Africa.

Additional cable systems pass through the Strait of Hormuz, connecting Iran, Iraq, Kuwait, Bahrain and Qatar to global networks. Both passages are now effectively off-limits to commercial vessels. The Red Sea following renewed Houthi attacks launched in solidarity with Tehran, and Hormuz after the Islamic Revolutionary Guard Corps declared it shut on 3 March, threatening to ‘set ablaze’ any vessel attempting passage.

Amazon Web Services, Microsoft and Google have collectively invested billions in the region, betting that the UAE and Saudi Arabia would become anchor markets for AI workloads across South Asia, Africa and beyond. As Carl Grivner, CEO at FLAG, commented in Capacity’s subsea sector report, “No one is building it just because they want to build a subsea cable. It’s because the demand is there, the data centres are there, the population is there.” That population, and those data centres, are now in the middle of a war zone.

A data centre fire and a warning shot

We reported earlier this week that an AWS data centre in the UAE was struck by unidentified projectiles, triggering a fire and forcing a partial shutdown. AWS subsequently experienced power and connectivity disruptions across multiple availability zones in the UAE and related outages in its Bahrain region.

Even without direct strikes, the effects are already propagating through the network. Closing both chokepoints simultaneously would constitute a globally disruptive event. Add into the mix that repair vessels cannot safely operate in either the Red Sea or the Strait of Hormuz while active hostilities continue.

In September 2025, damage to cables in the Red Sea disrupted internet access across parts of Asia and the Middle East, causing latency increases for Microsoft Azure services routed through the region. That incident involved no military conflict whatsoever, but serves as a stark reminder of just how little margin the network carries.

The Baltic Sea incidents of 2024, in which a Chinese-flagged vessel severed key cables, had already elevated the industry’s threat awareness. Maxie Reynolds, founder at Subsea Cloud, described the episode in Capacity’s subsea sector report as establishing the region as “a reference case for ‘persistent grey-zone risk,’ with repeated damage incidents and heightened state attention.” The current conflict in the Gulf moves the risk profile from grey-zone ambiguity to something considerably more direct.

Energy costs, latency and the AI buildout

The implications extend well beyond connectivity. Data centres are enormous consumers of power, and the conflict is already reshaping the energy economics on which hyperscale operators base their investment decisions.

Brent crude climbed from roughly $70 per barrel to above $80 in the days following the strikes, and analysts at Neuberger Berman have warned that a sustained closure of Hormuz lasting a month or more could push oil into triple digits, approaching the crisis levels last seen in 2022.

European natural gas prices nearly doubled in the space of 48 hours before partially retreating, a trajectory that will not be lost on data centre operators in Frankfurt, Amsterdam and London who are already battling increased power purchase agreement costs.

Despite escalating regional tensions, the Gulf’s core strengths – investment, land and until recently, political stability – largely remain. Saudi Arabia and the UAE possess alternative oil routes that bypass Hormuz, and both governments have demonstrated the ability to defend their territory against Iranian strikes.

The unexpected escalation has led to a reassessment of risk across the region. This shift is impacting more than just insurance premiums and network routing. Several major data centre projects in the UAE are now reportedly under review as investors reconsider their long-term capital commitments.

Rerouting, redundancy and the longer game

Operators with significant traffic flowing between Europe and Asia are already working on their contingency plans. The standard fallback for Red Sea disruptions (routing around Africa’s Cape of Good Hope) significantly increases transit times and increases latency for cable repair logistics. It does not, however, physically move the cables themselves.

The cyber dimension adds another layer of complexity. CloudSEK, which published a detailed threat assessment in the days following the strikes, flagged elevated risks of Advanced Persistent Threat activity, DDoS attacks and supply-chain compromise targeting organisations with economic or political ties to the conflict – a category that includes virtually every major cloud provider, financial institution and critical infrastructure operator in Europe and Asia-Pacific.

The situation poses a question that was almost theoretical six months ago: what does genuine resilience look like when two of the world’s four primary submarine cable corridors are simultaneously compromised? The answers –  more diverse routing and greater investment in terrestrial – are not new. But the urgency behind them very much is.

Trump has stated publicly that he expects the conflict to last four to five weeks. Markets and the data centre industry are hoping he is right.

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