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 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.
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