AGRO-INDUSTRY : The Middle East crisis pushes global palm oil prices higher
La voix des entreprises 
(LVDE) — After a year marked by declining prices in 2025, palm oil is once again on an upward trajectory, driven by geopolitical tensions in the Middle East. The military escalation and the surge in oil prices are boosting demand for the oilseed, which is widely used in both food production and biodiesel manufacturing, giving global producers renewed momentum.
On March 9, 2026, palm oil futures for May delivery, traded on the Bursa Malaysia Derivatives Exchange, jumped by 9% at the opening to reach 4,774 ringgit per tonne, or about $1,204. This daily gain marks the strongest increase in three years, following a previous rebound of 3.7% last Friday. The surge is directly linked to the military escalation involving Iran, Israel and the United States, which led to the temporary closure of the Strait of Hormuz and pushed crude oil prices above $100 per barrel.
This rise in crude oil prices makes the use of palm oil for biodiesel production more competitive than conventional petroleum-based fuel. Analysts at Platts report that the price spread between palm oil and gasoil traded in Singapore has narrowed to $177.96 per tonne, representing a 44% decline compared with last year. In 2025, the average spread stood at around $328.45, which limited producers’ interest in energy substitution.
Palm oil, the most widely consumed vegetable oil in the world, is particularly sensitive to fluctuations in oil prices. If the crisis persists, prospects for further price increases could strengthen this year, after the market was shaken by a 9% decline in 2025, closing the year at 4,050 ringgit per tonne. This drop had been exacerbated by Indonesia’s decision to postpone the mandatory use of B50 biodiesel, maintaining the B40 blend due to technical and financial constraints.
The Indonesian government recently raised export taxes and levies on palm oil as of March 1, 2026, increasing them from $165.85 to $241.36 per tonne. This measure encourages producers to prioritize the domestic market for refining and biodiesel production, thereby reducing export supply and increasing pressure on global prices.
At the same time, demand from India remains a key factor. The country’s palm oil imports reached 844,000 tonnes in February, up 10.1% from January and the highest level in six months. However, a sustained increase in prices could push buyers toward alternatives such as soybean oil, whose global availability is greater and cheaper.
Beyond market volatility, this surge highlights the sensitivity of the global agro-industrial sector to geopolitical and energy-related events. Producers in Africa and Asia, the world’s main exporters, could benefit from the favorable context, but global consumers may face increased pressure on food prices and the biofuels market.
Esther Grace
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