MUMBAI/KUALA LUMPUR – Rising crude oil prices and higher freight rates driven by the Middle East conflict could boost demand for palm oil from the biodiesel sector and for food use, as Asian buyers seek prompt shipments, industry officials told Reuters.
Indonesia and Malaysia’s output rose to a record high in 2025, swelling stocks and weighing on prices. But the conflict has suddenly made palm oil attractive to the biodiesel industry, pushing prices to their highest level in more than a year.
“Palm oil is now trading at a steep discount to gasoil, with the current spread lucrative enough to boost demand from the biodiesel industry,” said Anilkumar Bagani, research head of Mumbai-based vegetable oil broker Sunvin Group.
Oil prices surged more than 25% on Monday (11/03/2026) to their highest levels since mid-2022 as some major producers cut supplies and fears of prolonged shipping disruptions gripped the market.
Indonesia, the world’s largest user of palm oil-based biodiesel, said it may revive plans to roll out a B50 grade of palm oil biodiesel mid-year to counter surging crude oil prices.
In January, Jakarta shelved the plan to produce B50, an equal blend of palm oil biodiesel and conventional diesel, citing technical and funding challenges and continued with the B40 mandate instead.
A long-term policy shift from countries such as Indonesia is likely only if palm oil trades at a consistent discount to gasoil over an extended period, said Bagani.
Used in everything from cakes and frying fats to cosmetics and cleaning products, palm oil makes up more than half of global vegetable oil shipments and is especially popular among consumers in emerging markets, led by India.
Southeast Asia is well positioned to consistently supply palm oil to buyers in Asia, the Middle East, and Europe, said Carl Bek-Nielsen, vice chairman and chief executive director at United Plantations Berhad.
Palm oil supplies remain ample and can be shipped quickly to Asian buyers, but it has now become more expensive than rival soy oil, which could limit gains in demand, said a New Delhi-based dealer with a global trade house. (*)
Reuters. 2026. “Mideast Conflict Makes Palm Oil Attractive Source of Energy.” Reuters, 9 Maret 2026. Tersedia pada: https://www.reuters.com/sustainability/climate-energy/middle-east-conflict-could-spur-palm-oil-demand-biodiesel-sector-2026-03-09/
