New era of US-Middle East trading will be about AI, not crude oil

Yahoo

15-05-2025

President Trump began his four-day tour through the Middle East this week, beginning in Saudi Arabia on Tuesday. This visit has sparked several AI deals from Nvidia (NVDA) and Super Micro Computer (SMCI) with Saudi Arabia and the United Arab Emirates, on top of the White House reporting a massive order of Boeing planes (BA) from Qatar Airways.
Middle East Institute Senior Fellow Mohammed Soliman comes on to expand upon the growing trading relationship between the US and Persian Gulf countries, namely in the areas of AI infrastructure and semiconductors, a technological pivot away from crude oil (CL=F, BZ=F) exports.
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President Trump's visit to the Middle East unleashing a wave of AI deal making. The Trump administration clearing a path for Saudi Arabia and the United Arab Emirates to pursue their artificial intelligence ambitions as deals with companies like Nvidia offering Saudi Arabia and the UAE wider access to advanced AI chips, data centers, and AI infrastructure. What are the risks associated with those deals? Joining us for more, Muhammad Suleiman, senior fellow at the Middle East Institute. Muhammad, thank you for being here. So, I guess, let's, you know, there's a lot of fanfare around all of these deals. It's not just about AI. We just turned about a big deal for owing, uh, for Boeing planes from Qatar. So, what? How are you viewing this sort of wave of deal making that, that we're hearing about?
Great be with you. Let me start by saying that the relationship between the United States and the Gulf has changed in the past 10 years. It started gradually in the mid 2010s when the Gulf countries start to diversify their economies away from oil. And they believe and they think that their future of their countries as sovereign states as economies that wired for the 21st century is all about AI infrastructure. So, the Gulf countries going to see that sort of trend of those, of those Gulf countries, Saudi Arabia, UAE, and Qatar trying to become the back end for compute power that fuels the AI, uh, AI ecosystems globally. And this means that they have access to low-cost energy, they have access to capital that they're able to invest in AI infrastructure. On top of all of that, they also secured partnerships with the United States when it comes to chips. So, they have what I call the compute triangle, chips, data centers, and capital. And that's what makes them very powerful player in AI ecosystem globally. And this is why you see a lot of excitement around the president's trip to the region because it's more of a new era of relationship between the United States and the Gulf wired around compute, not really crude.
And Muhammad, Tom Hayes is with me as a guest host for the hour, and he wants to ask you a question as well.
So, Muhammad, what do you see as the magnitude of the, the amount of data center, centers relative to the rest of the world, uh, and, and how are they cooling them? Uh, is, is a key question in, in the Middle East, uh, moving forward. What, what do you see as, as the future? Is it going to be the data center hub of the world or is it just going to be a major player along, alongside the US and, and other nations?
Excellent question. I would say outside of the United States and China, the Gulf is clearly emerging as this third theater of AI power. They are willing to be, to invest heavily in AI infrastructure. And the question that you posed about cooling is extremely important. I would say cooling today is not particularly about the question of access to water. It's about what cooling technologies that you have access to. We have seen a lot of new technologies, uh, submersion cooling, uh, direct chip cooling that are reducing the cost, uh, broadly, the space needed for these sort of data centers. And I believe that the Gulf countries through their energy companies are investing in these sort of new chemicals for cooling because this is extremely important question for them. But to add on top of that, I think right now we are acting an environment where energy is the real bottleneck for AI computing. Yeah. Yeah. That, uh, you would, I would argue that even chips, even chips with all the discussions around export controls and China able to access restricted AI chips from the United States, I don't believe that chips are the bottleneck. I think you through cash, R&D, huge market, I think it's very fair to say that you're going to have other countries able to have that sort of capability. But I think the question of energy, abundant energy to fuel the AI ecosystem is the main central, uh, decisive factor here. And this is where the Gulf is finding its own niche.
So if that's true, then effectively, the, the two winners by default have to be the UAE, the, the, uh, the Middle East and the United States because we have effectively unlimited access to energy. And, uh, and natural gas being the derivative play to, to see that in the first stages. Is that a fair way to think about it?
I think it's a very fair way to think about that. I think the Gulf countries have been investing heavily in building the electricity grids around this sort of major hyperscale AI infrastructure. I agree with you. The United States is clearly ahead in the AI race. We have more than 60% of the global AI compute inside the United States. We have the abundant energy and with the new discourse trying to streamline permits inside United States to do major data center buildup, I think we are going to hopefully maintain our lead.
Yeah. And, and moving forward, that puts China at a relative disadvantage.
I wouldn't say that yet for couple of reasons. China is a huge market and they're able, and they were able to prove that they're able to innovate and even exceed expectations when it comes to their own innovation ecosystem. We have seen the Huawei release of AI chip, the send AI chip, and that has been doing actually, uh, uh, better than expected. So, I wouldn't really discount China. I think China is a compare in the AI race. I think they have the determination. They have the R&D spending. They're willing to go the extra mile. And I think you're going to see a lot of breakthrough inside, inside the Chinese AI ecosystem.
Muhammad, to come back to my original question about sort of the risks here, are there any national security concerns about some of these deals sending chips, sending other infrastructure, um, to, uh, the, these Gulf Coast nations?
This is an excellent question, and we do have two camps when it comes to the question of chips. You have the camp that says, we have to restrict, uh, chips exportation to any part of the world. We only have to export, we should export chips to very trusted allies, uh, five eyes partners, even NATO, even not, not the entire NATO nations were part of what we called the AI division rule that was released under President Biden. So this is a camp. There's another camp that's saying that, well, okay, sure, we're going to restrict sending these chips overseas, but that comes at a cost. That means we're going to prevent, we're going to undermine our American companies when it comes to their own profits. These are the profits that Nvidia uses for um, uh, for R&D. So you have to come with a balance. And I think the discourse we are seeing right now is how to come up with an government-to-government AI agreement with the countries that matter in the AI race, like the Gulf countries when we have agreement on access, on security protocols. And by this, we're able to protect our own IP and our own chips. I think this is the way, this is the way we're thinking about the question of chips and export control right now.
Muhammad, thank you so much. Appreciate it.
Happy to be with you.