InfoSAWIT, JAKARTA – Rising geopolitical tensions involving the United States, Israel, and Iran are beginning to affect the global palm oil industry. The Indonesian Palm Oil Association (GAPKI) reported that logistics and shipping insurance costs have increased by around 50%, contributing to a slowdown in new palm oil export contract demand.
GAPKI Chairman Eddy Martono said Indonesian palm oil exports are still running despite growing cost pressures caused by the escalating geopolitical situation.
“With the current global conditions and the war situation, we are grateful that palm oil exports are still running, although the increase in costs is extraordinary. Logistics and insurance costs have risen by about 50%. However, we must also be honest that this increase has led to a slight decline in demand,” Eddy said at the Indonesian Ministry of Agriculture office, Wednesday (March 11, 2026).
New Contracts Slow Down
Eddy explained that most of the current crude palm oil (CPO) exports are the realization of previously agreed contracts. Meanwhile, new export contracts are starting to slow down due to rising shipping costs faced by exporters.
The increase in logistics costs mainly affects shipping routes passing through the Strait of Hormuz, one of the world’s most strategic maritime corridors currently impacted by the escalating Middle East conflict.
“Shipments that pass through the Strait of Hormuz are clearly affected. Some routes have temporarily stopped, including shipments to the United Arab Emirates and Iran. However, the export volumes to those destinations are relatively small,” he said.
India and China Demand Remains Stable
Despite disruptions on several routes, shipments to Indonesia’s major palm oil markets continue relatively normally. Demand from large consumers such as India and China remains stable, as does demand from Saudi Arabia.
According to Eddy, GAPKI has not observed any significant build-up of palm oil stocks domestically. Exports continue to depart daily from major Indonesian ports, including Tanjung Priok.
However, he noted that there has not yet been any significant increase in additional demand from India or China. Both countries still have alternative vegetable oils, including sunflower oil and soybean oil, which can partially substitute palm oil.
From a pricing perspective, global CPO prices have not shown a significant spike amid the current geopolitical uncertainty. Prices remain around US$1,100 per ton.
Looking ahead, GAPKI hopes that tensions involving the United States, Israel, and Iran will ease soon so that logistics costs can normalize and palm oil export demand can recover.
“We will see how long this situation lasts. Hopefully once the conflict ends, export demand will return to normal,” Eddy concluded. (T2)
