At a time when the Iran war is reshaping the map of risks in the Gulf, Oman’s effort to establish a special economic zone for artificial intelligence in Muscat appears to be more than just a new investment announcement. The decree issued by Sultan Haitham bin Tariq Al Said last week places the Sultanate within a Gulf race over the AI economy, but it also comes at a moment when technology is no longer isolated from calculations of security and politics.
Over recent years, Gulf states have poured billions of dollars into this sector through their sovereign wealth funds and partnerships with major global companies, betting on data centers and advanced digital infrastructure as the foundation of a post-oil economy. However, the war that broke out at the end of February between Iran on one side and the United States and Israel on the other has changed the nature of this bet. The strikes that hit Gulf countries and infrastructure, including facilities linked to artificial intelligence and data centers, have shown that these assets are no longer outside the scope of targeting; rather, they have become part of the equation of deterrence and escalation.
This shift may push investors to reconsider the geographic distribution of their assets. It is no longer only about who offers greater incentives or more advanced infrastructure, but about who appears safer and less vulnerable to disruption with each escalation in the region. This is especially important in a sector like artificial intelligence, where investments are based on large and sensitive facilities such as data centers. From here, the question arises: do these risks give Oman a broader opportunity to attract a share of these investments, as the country that appears to have emerged from the war with the least damage?
In this context, Omani economist Youssef Al Houti says that political stability and relative neutrality give Oman an advantage in attracting long-term investments, especially in sensitive fields such as artificial intelligence, where major companies seek environments that are legally and security-wise predictable. However, he adds that this advantage alone is not sufficient unless it is supported by investments in education, infrastructure, and legislation, which could allow Oman to transform into an important player, and perhaps a specialized regional hub, in certain areas of artificial intelligence.
Kuwaiti economist Qais Al Shatti believes that Oman is qualified to become one of the important incubators for the artificial intelligence sector in the Gulf, but he expects the region to move toward a geographically distributed system in which countries’ roles complement one another rather than compete individually.
Omani journalist Ahmed Al Shizawi says that Saudi Arabia and the United Arab Emirates will remain attractive to major companies due to the size of their markets, but he believes that Oman has begun to present itself from a different angle, with the specialized AI economic zone project and by leveraging the transformations the region is undergoing.
He adds that more companies are now looking for relatively safe locations, which may give Oman an opportunity to present itself as an alternative destination, benefiting from its stability, its relative distance from tension points, and its geographic diversity suitable for data centers and digital infrastructure. He also points to growing interest in transforming the Sultanate into a hub for semiconductor manufacturing, with some companies beginning investment steps in this field.
Al-Shizawi believes that Oman’s attractiveness to investors is primarily based on stability and security, not on market size or financial weight. Therefore, its transformation into a regional AI hub may not happen quickly, but it remains possible in the long term if it continues its current approach or if regional volatility pushes some companies to reposition.
According to him, Oman’s ambition does not appear to be based on direct competition with major Gulf hubs, but rather on offering a calmer environment for companies and investments that prioritize stability, making the Sultanate resemble a fallback option in times of uncertainty.
During the war that erupted on February 28, Iran targeted data centers linked to major technology companies, including two Amazon centers in the UAE, while a drone attack caused damage to a third center in Bahrain. According to what Amazon announced on March 1, the damage included structural harm, power outages, and the activation of fire suppression systems, leading to water damage in some facilities.
The attacks caused disruptions to cloud computing services, affecting banks, payment platforms, and the company Snowflake. Amazon also exempted its customers in the Middle East from March 2026 fees, in a move estimated at around $150 million.
In the same context, a data center complex belonging to Pure DC on Yas Island in Abu Dhabi was hit by shrapnel. The site, with a capacity of 20 megawatts, is dedicated to supporting artificial intelligence applications and cloud computing, with no announcement of the extent of losses.
After a data center belonging to an Iranian bank was targeted on March 11, Iran’s Revolutionary Guard escalated its threats and published a list that included companies such as Google, Microsoft, Palantir, IBM, Nvidia, and Oracle. On April 2, there was an attempt to target an Oracle facility in Dubai, but air defenses intercepted the attack, and shrapnel fell on the building’s façade.
Al-Houti says that Oman emerged from the war’s repercussions with less damage, which strengthened its image as a relatively safer destination, benefiting from its political stability and its location between Asia and Africa. New projects may also give it the opportunity to build modern infrastructure from the ground up and attract companies seeking a calm and stable operating environment.
However, he believes that Oman is closer to being an emerging and safe center in the field of artificial intelligence rather than a direct regional leader. The success of this path, he says, depends on attractive investment incentives, the development of human capital, and the acceleration of infrastructure projects.
He adds that transforming into an actual AI incubator requires advanced data centers, fast digital connectivity, stable energy, and flexible regulations governing data use and encouraging innovation. It also requires funding for research and development, and building an ecosystem that includes startups, incubators, and partnerships with global technology companies.
According to Al-Shatti, global companies no longer look only at the size of funding and growth opportunities but also ask about infrastructure safety and the ability of projects to operate in a stable environment over the long term.
Al-Shatti believes that the greatest damage did not affect the overall direction of investment, but rather its timing and momentum. Some projects were postponed, and others underwent reassessment due to geopolitical risks. This delay, he says, does not only mean financial losses, but may also slow the transfer of expertise and the development of local capabilities.
Nevertheless, the region does not appear to be on the path to losing its attractiveness. Al-Houti believes that Gulf countries still possess liquidity, plans, and sufficient demand for artificial intelligence to regain momentum, but within stricter calculations regarding security, regulations, and operational continuity.
Al-Shizawi, meanwhile, believes that major companies have not reached the stage of withdrawing from the Gulf, but they have become slower in their decisions and more meticulous in the details. The priority now, he says, is protecting data, strengthening backup systems, and ensuring the ability of digital centers to operate during disruptions.
Between sustained attractiveness and rising caution, Oman is trying to find its place as a calmer option in a turbulent region.
The article is a translation of the original Arabic.
Sakina Abdallah
A Saudi writer, researcher, and TV presenter
