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Escalating geopolitical tensions, particularly in the Middle East, are driving a resurgence in global crude oil prices, which in turn is bolstering demand for biofuels and consequently pushing vegetable oil prices higher. However, despite these upward pressures, physical market purchase prices for vegetable oils are being limited by cautious demand from buyers.
Recent hostilities, including Iran's attacks on ships in the Strait of Hormuz and renewed US strikes on Iranian military facilities, have significantly impacted energy markets. September Brent crude futures surged by 7% over seven days, reaching $91 per barrel. This represents a substantial 22% increase in the past two weeks and an 18% rise over the last month, attributed to another suspension of oil exports from the Persian Gulf.
Simultaneously, the intensification of Russian shelling on Ukraine's Black Sea ports and numerous attacks on civilian vessels off the coasts of Ukraine, Romania, and Turkey have brought maritime exports from Ukraine to a near standstill. Shipowners are increasingly unwilling to risk loading vessels, effectively paralyzing a key export route. This disruption has spurred demand and inflated prices in other exporting nations, even as domestic purchase prices within Ukraine experience a decline.
The rapeseed market has been particularly sensitive to the export suspension from Ukraine. Rapeseed prices on the Paris stock exchange climbed by 7.9% over two weeks. This translated into an additional increase of $30-40 per tonne for rapeseed oil in the EU, reaching $1,570-1,575 per tonne FOB Netherlands, a 5.7% rise in two weeks. Conversely, the reduction in seaborne rapeseed exports from Ukraine is expected to boost domestic rapeseed processing there, where prices have fallen sharply. This shift will likely lead to an increased supply and export of cheaper Ukrainian rapeseed oil, destined for the western border of the EU, with demand prices ranging from $1,250 to $1,280 per tonne. Meanwhile, demand prices for Ukrainian rapeseed oil delivered to China remain low at $1,275-1,300 per tonne CFR. China has significantly ramped up imports of rapeseed oil from the Russian Federation, with supplies increasing by 31% in the first six months of 2026 compared to the same period in 2025, reaching 855 thousand tonnes. Therefore, active Chinese demand for Ukrainian oil is not anticipated, especially given forecasts of a record Russian rapeseed harvest of 6.4 million tonnes, up from 5.5 million tonnes last season.
In the soybean oil sector, December futures on the CBOT exchange in Chicago advanced by 1.3% to $1,577 per tonne over the past week, marking a 6.5% increase over two weeks. This surge was underpinned by rising crude oil and soybean prices, following new purchases of US new crop soybeans by China. Spot prices for soybean oil in Brazil mirrored Chicago's upward trend, increasing by $10 per tonne to $1,200-1,210 per tonne FOB. Similarly, August delivery soybean oil futures on the Dalian exchange in China rose by $10-15 per tonne to $1,250-1,260 per tonne.
Palm oil, however, displayed a more subdued reaction. August palm oil futures on the Bursa Malaysia exchange saw only a marginal 0.8% increase during the week, closing at 4,610 ringgit per tonne or $1,127 per tonne, effectively trading at the same level as two weeks prior. Its limited response to rising crude oil prices is attributed to lower demand from India, which is currently processing its own domestic crop.
For sunflower oil, bid prices in India rose by $5 per tonne to $1,450-1,455 per tonne CIF Mumbai during the week, largely due to reduced supply from Ukraine and Russia. In Russia, bid prices for sunflower oil remain at $1,340-1,360 per tonne FOB as exporters endeavor to maximize sales of their remaining old crop at favorable prices. This strategy anticipates a record sunflower harvest and a subsequent increase in supply from September, which is expected to depress prices. In Ukraine, purchases with delivery to Black Sea ports have virtually ceased due to persistent shelling. Nevertheless, offers to sell sunflower oil from Danube ports are available at $1,380-1,385 per tonne FOB.
Looking ahead, expectations of strong rapeseed and sunflower harvests across the EU, Ukraine, and Russia are poised to further increase supply in the vegetable oil market. This impending surge in availability, coupled with ongoing discussions between the US and Iran about a potential truce, is making buyers exceedingly cautious about committing to high-priced oil purchases, as they anticipate a future decrease in prices.
Source: UkrAgroConsult