Malaysia is increasing the use of palm oil-based biodiesel as part of efforts to reduce reliance on imported crude oil and protect domestic fuel supplies during ongoing disruptions in global energy markets.
At the Klang Valley Distribution Terminal (KVDT), one of Peninsular Malaysia’s key fuel distribution hubs, diesel and palm oil methyl ester (PME) are loaded separately into fuel tankers before being mixed during transport. The process creates biodiesel that is later supplied to petrol stations and industrial users, The Straits Times reported.
According to representatives from PS Pipeline, diesel and PME are combined through an inline blending process while the tanker is in transit, allowing for a more uniform fuel mixture before delivery.
Traditionally, Malaysia has used a B10 biodiesel blend, containing 90 per cent diesel and 10 per cent palm oil methyl ester. However, beginning June 1, authorities started gradually increasing the palm oil content to 15 per cent.
The move follows disruptions linked to the Iran conflict, which affected shipping movements through the Strait of Hormuz, one of the world’s most important oil transport routes.
Although Iran and the United States have since agreed to a peace arrangement, officials expect congestion and shipping delays in the strait to continue for several weeks.
Malaysia’s decision to raise the biodiesel blend is intended to preserve domestic diesel supplies amid concerns over fuel availability. Authorities have warned that current reserves may be sufficient only through July.
The Ministry of Economy is scheduled to present a ministerial statement on June 22 when Parliament resumes, outlining the government’s response to the wider global energy situation.
Despite being an oil-producing nation, Malaysia continues to depend heavily on imported crude because domestic production meets only around half of daily demand, which stands at approximately 700,000 barrels per day.
Official figures show Malaysia imported 3.4 million tonnes of crude petroleum and condensate during the first quarter of 2026, marking a decline of about one-third compared with the same period last year.
