From Oil Rigs to Algorithms: How the Gulf is Betting its Future on AI

By Jeff Zhou

Source: Technology Magazine

Introduction

The Middle East has long been a prominent force in the global oil market, controlling a sizable portion of the world’s proven oil reserves. However, President Trump’s recent four-day trip to the Gulf signals a shift in focus from an oil-dependent economy to one increasingly driven by technology, particularly artificial intelligence (AI). 

The implications of this shift are wide-ranging, as the US and China compete to harness the full potential of AI. Furthermore, growing concerns exist around security threats triggered by the Middle East’s AI ambitions. It is therefore essential to assess both the short- and long-term trends in the region to understand how the future may unfold. 

This analysis also highlights where the Gulf fits into the current global AI landscape, as different regions pursue distinct regulatory models. The EU’s AI Act is poised to shape international norms, much like the GDPR did for data privacy, while the US continues to work on establishing a dedicated regulatory body. The fragmented global ecosystem is compounded by the rapid pace of AI advancements, such as OpenAI’s launch of GPT-4.5 and China’s rollout of DeepSeek. As these trends accelerate, the Middle East faces a narrowing window to define its role on the international stage.

Major AI players in the Middle East 

The biggest winners of Trump’s Gulf tour are undoubtedly Saudi Arabia and the United Arab Emirates (UAE). The former secured a $600 billion deal for semiconductors, which includes a commitment to purchase hundreds of thousands of NVIDIA Blackwell chips for Humain, an AI startup owned by the Saudi Public Investment Fund. Additionally, tech giants including Salesforce, Google, and AMD signed agreements to fund Saudi projects, most notably Oracle’s $14 billion 10-year commitment. 

At the same time, the US and the UAE agreed on Abu Dhabi as the site of the biggest AI campus outside the US, enabling G42, a state-backed AI powerhouse, to import half a million NVIDIA semiconductor chips. Cisco also announced a partnership with a UAE-based AI firm to support the country’s expanding AI sector.

Even before Trump’s visit, Saudi Arabia and the UAE had made significant progress in AI development. In 2017, the UAE became the first nation to appoint a federal Minister of AI, and two years later, it established the Mohamed bin Zayed University of AI. Inspired by its neighbour’s actions, Saudi Arabia integrated AI into its Vision 2030 plan, aimed at reducing economic reliance on oil. This included the creation of the Saudi Data and Artificial Intelligence Authority (SDAIA) in 2019 and the launch of Project Transcendence, an ambitious initiative seeking $100 billion in investments to build a robust AI ecosystem.

Short- and long-term implications 

With Saudi Arabia and the UAE leading the charge in AI, other Middle Eastern countries have begun to follow suit, notably Qatar, which expects its AI market to reach $58.5 million by 2026. In the short-term, this surge in AI activity is fueling job creation across adjacent industries (e.g. IT, cloud services), and encouraging a rise in AI-focused entrepreneurship. Multinational tech corporations increasingly see the Gulf as a gateway to target MENA and Sub-Saharan Africa.  

Although the immediate effects of AI’s rise in the region are clear, the long-term implications are much more complex. As the US and China battle for AI supremacy, the Middle East has emerged as a powerful potential ally. The US appears to have taken the lead in forging an alliance, highlighted by Trump’s Gulf tour. However, the “China hawks” within the administration worry that, despite agreements, chips and technologies could be diverted to Beijing through China’s deep ties across MENA. Past dealings between G42 and Huawei heighten this risk. If major AI players in the Gulf fail to allay concerns of being merely pitstops for chips bound for China, the US might pull back its strategic partnerships. 

Another concern is that malicious actors could illegally acquire Gulf-sourced GPUs for illicit purposes. For instance, Hamas has allegedly used AI to generate deceptive imagery that fuels misinformation and propaganda. Meanwhile, pro-Islamic State supporters are leveraging AI tools to transcribe spoken Arabic ISIS speeches and then translate them into English, broadening their recruitment reach. As terrorism continues to evolve in the region, the rise of AI technologies threatens to compound existing security challenges.

What the Middle East will do next 

Despite the complexity of emerging AI challenges, the Gulf appears well equipped to confront them. The 2024 Microsoft-G42 deal  marked a major step toward mitigating the risk of technology diversion. The US approved the export of advanced AI chips to a Microsoft-operated facility in the UAE, with restrictions on access by personnel from embargoed nations and blacklisted entities. Microsoft also received a minority stake and board seat as part of its $1.5 billion investment, granting the US greater oversight of G42’s operations.  This agreement has helped build strategic trust and a framework for shared governance. 

Saudi Arabia has zoned in on tackling the threat of terrorists exploiting AI. A notable initiative was a joint collaboration with the United Nations Counter-Terrorism Centre (UNCCT) and the United Nations Interregional Crime and Justice Research Institute (UNICRI) to draft a report analysing the risks of AI misuse by rogue operators. The report outlined proactive measures for governments and enterprises to prevent the weaponisation of AI. Clearly, the Kingdom of Saudi Arabia is aware of the dangers posed by AI. 

Overall, the Middle East is primed to scale its efforts in developing cutting-edge AI. At the moment, the region may be viewed as a pawn in the chess match between the US and China. However, as the Gulf starts ramping up initiatives to attract top tech talent, it’s soon becoming a crucial hub for energy resources and sustainability. The critical question moving forward is whether regional leadership can effectively manage evolving threats without impeding rapid innovation.

---