Rising tensions in the Middle East have pushed global crude oil prices sharply higher, with some benchmarks climbing more than 25 percent and reaching levels last seen in mid-2022. The surge in energy prices is beginning to change the cost dynamics of alternative fuels, biofuel international reported.
As crude becomes more expensive, biodiesel producers are increasingly turning to palm oil, which is currently trading at a lower price than gasoil, making it a more economical raw material for fuel production.
Higher shipping costs are also influencing buying decisions. Importers across Asia are seeking faster deliveries of vegetable oils as freight rates rise, which has further supported demand for palm oil.
Meanwhile, leading producers Indonesia and Malaysia—which account for most of the global palm oil supply—have recorded strong production levels, resulting in high inventories and downward pressure on prices in recent months.
However, the recent conflict has changed that trend, pushing palm oil prices to their highest level in more than a year.
Policy changes could further influence the market. Indonesia is considering reviving its B50 biodiesel programme, which would increase domestic consumption of palm oil and could tighten supplies in the global market.
