Iran War Impact on IT Spending: IDC First Look, Global Outlook 2026

The escalation of conflict in the Middle East introduces a new macroeconomic and geopolitical variable into an already fragile global technology environment. While IDC does not comment on political dynamics, the technology sector implications are immediate and measurable. Based on early regional intelligence and IDC’s macroeconomic modeling framework, we see six primary impact vectors on IT spending: energy price volatility, cloud and data center resiliency, sovereign infrastructure acceleration, cybersecurity, supply chain, and shifts in consumer and enterprise investment sentiment. Given the early and rapidly developing nature of this situation, we are focusing most of our scenario analysis and forecasts on a war limited to the middle east which lasts for less than 3 months. We won’t be publishing scenario data for a longer timeline at this stage. As we continue to monitor the situation, we’ll decide whether the likelihood of that longer timeline becomes clearer and more relevant.
In a downside scenario where the conflict lasts for up to 3 months, the impact on IT spending would be measurable but relatively moderate. Service providers are likely to maintain aggressive investment plans for AI infrastructure deployment at global scale, even in the context of a weakening macroeconomic environment. A relatively short conflict would have limited impact on demand for cloud services and enterprise software, but returning inflationary pressures could put a drag on device upgrades and some discretionary spending.
In this downside scenario, global IT spending would grow by around 9% in 2026, versus our baseline forecast of 10% growth. A longer conflict would have a more pronounced impact on IT spending but is currently more difficult to predict.
IT spending in the Middle East and Africa region was $155 billion in 2025, representing 4% of the global market, and is currently forecast to increase by 5% in 2026. This is lower than global growth, due to memory price pressures on device markets which make up a larger share of IT spending in the region.
In a downside scenario where the conflict is resolved within 3 months, IT spending growth in MEA would fall into the range of 3-4% this year, with negative implications for business and investor confidence in the short term. The impact at country level would be extremely mixed, reflecting oil supply dynamics and other factors. A longer conflict would have a greater impact.
However, we currently maintain our baseline forecast which assumes a short conflict that will be less disruptive for underlying IT demand including AI infrastructure deployment, cloud migration and ongoing digital transformation initiatives. We will continue to monitor and update as the situation develops.
Below is IDC’s structured assessment of the near- and mid-term implications for IT spending across the Middle East and globally.
Oil prices rose 7–8% immediately following the escalation, with Brent crude moving toward the $70–$80 range. IDC’s IT spending model has an oil price baseline average in the $65-75 range. IDC’s model assumes average oil prices will rise between $75-85 based upon a 3-month conflict and if the conflict last longer, IDC expects oil prices to inch close to $100 or more.
Amplifying supply side concerns is the shutdown of Aramco refinery production—reportedly impacting approximately 500,000 barrels per day. Qatar Energy has temporarily stopped gas production, which has escalated gas prices in Europe to 40-50% higher. If the war continues for an extended period of time, the input costs will greatly increase for those countries that heavily rely upon gas and oil from the region.
Energy price volatility is the most significant macro transmission through which this conflict will impact overall IT spending assumptions for 2026. Energy price increases will create new inflationary pressures and could have a significant impact on central bank monetary policy. Business and consumer confidence remain extremely fragile, following the period of high inflation in recent years, while IT products are also facing inflationary pressures from memory component shortages. Rising prices may result in spending delays and reallocations.
This war marks the first time where major cloud provider regions and availability zones are operating in an active conflict zone. A series of strikes on multiple facilities of a global cloud provider within multiple availability zones in first few days highlights architectural resiliency, but also the potential vulnerability of cloud environments in a period of sustained conflict. IDC projects that investments in cloud, storage and data center architecture will be an investment priority. However, data center construction is capital intensive and multi-year. Rising construction costs, higher financing costs, and supply chain friction could slow execution timelines.
Globally, this event resets expectations around:
While long-term cloud investment may increase, near-term project pacing could slow as enterprises reassess architecture.
Digital sovereignty was already a defining force in cloud strategy across the Gulf as countries prioritize digital self-determination for their organizations and citizens. Even at this early point in the conflict, governments across the Gulf, particularly capital-rich states, are likely to accelerate investment in sovereign digital infrastructure and distributed cloud models to strengthen agility, resilience, and long-term survivability. They will focus on:
Countries will increasingly focus on creation of a Critical infrastructure resilience model that aligns with a broader push for “strategic autonomy” and reduces over-reliance on foreign infrastructure providers:
Fiscal dynamics matter, however. Active military expenditures—estimated in billions within the first days of escalation—introduce budget trade-offs. The duration of conflict will determine whether sovereign IT investments accelerate or face temporary reprioritizati