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A prolonged Middle East conflict could keep crude oil prices supported through 2026, providing a key floor for palm oil prices and reinforcing bullish trends across the global edible oils market.
Malaysian Palm Oil Council (MPOC) Chief Executive Belvinder Kaur Sron said that rising crude oil prices typically feed through to edible oil markets, including palm oil, given palm oil's role as a feedstock in biodiesel production.
She explained that a significant share of crude oil exports from producing nations passes through the Strait of Hormuz, a critical chokepoint in global energy trade.
Belvinder added that any disruption to shipping through the strait could affect more than 20% of global crude oil supply, pushing crude prices higher.
She continued: "This logistical disruption could also delay palm oil shipments to Middle Eastern markets such as the United Arab Emirates, Iraq, Kuwait, Qatar and Bahrain.
However, the impact on supply is likely to be localised, mainly affecting deliveries to these destinations rather than causing shortages in overall global palm oil supply," she told Bernama.
She noted that instability in the Middle East continues to pose a geopolitical risk, and that flare-ups in tension can rapidly transmit shocks across global energy markets, war-risk insurance premiums and major maritime trade routes.
Nevertheless, while short-term increases in freight rates and war-risk insurance premiums may occur, direct exposure of Malaysian palm oil exports to the affected region remains manageable, according to Belvinder.
She explained: "The resulting increases in freight rates and potential disruptions to shipping schedules place immediate pressure on supply chains.
These dynamics can escalate into higher logistics and production costs, tighter trade finance conditions, and broader inflationary pressures that ultimately affect industrial competitiveness and the affordability of commodities, including edible oils and processed food products."
Belvinder said the MPOC has continuously stepped up efforts to expand market access and diversify demand for palm oil, reducing reliance on any single market and strengthening resilience against geopolitical disruptions.
She added: "We are strengthening palm oil's presence across Asia, Africa, the Americas and other growth regions, while advancing downstream development in high-value segments such as speciality fats, oleochemicals and nutraceuticals."
Malaysia's total exports of palm oil and palm oil-based products reached 24.83 million tonnes in 2025, of which 1.34 million tonnes were shipped to the Middle East, excluding Turkey, representing about 5% of total exports.
Source: Bernama