Rising energy prices caused by the war in Iran are creating serious risks for the global economy—and the AI industry could be hit hard. US gasoline prices have surged, but higher energy costs are spreading far beyond fuel. Oil-importing nations are facing shortages, curfews, and energy emergencies. Egypt has limited shop hours, Indonesia now has work-from-home Fridays, and the Philippines has declared a national energy emergency. Even in the US, a major oil producer, higher energy costs are impacting businesses. Analysts warn the AI industry is particularly vulnerable. AI companies rely on energy-intensive data centres, complex supply chains, and huge, often debt-financed investments. OpenAI CEO Sam Altman previously acknowledged the energy needs of AI models, joking that training humans takes even more energy over 20 years—but the sector’s current scale is unmatched. The Bank of England and World Trade Organization have highlighted the risk: rising energy costs could pressure AI investments and weaken already fragile financial structures. In the US alone, 70% of investment growth last year involved AI-related goods, showing the sector’s scale and sensitivity. Legal analysts note AI infrastructure is often financed through off-balance sheet vehicles and complex debt arrangements. Datacentre operators borrow billions against projected revenue, creating interconnected financial risks. Quinn Emanuel, a US law firm, estimates $120 billion in datacentre debt has been moved off-balance sheets in the last two years. Even modest increases in energy prices could trigger a financial rethink. If demand drops or interest rates fluctuate, the ripple effect could hit investors and markets worldwide. The key question remains: can the AI sector generate enough revenue to support its massive infrastructure and sky-high valuations? The ongoing Iran war may force investors—and the industry itself—to find out sooner than expected.