InfoSAWIT, KUALA LUMPUR – The recent surge in global crude oil prices, driven by escalating geopolitical tensions in the Middle East, is once again increasing the attractiveness of palm oil-based biodiesel, providing support to crude palm oil (CPO) prices in the international market.

As reported by The Edge Malaysia on Tuesday (March 24, 2026), analysts noted that crude oil prices surpassing the US$100 per barrel mark have become a key driver underpinning CPO prices.

Higher crude oil prices tend to strengthen palm oil prices by improving biodiesel economics. As diesel prices rise, blending biodiesel becomes more economically viable.

B50 Momentum and Tightening Supply

This development is expected to accelerate Indonesia’s implementation of its B50 biodiesel mandate, given its position as the world’s largest palm oil producer.

The increased biodiesel mandate is projected to tighten global CPO supply, thereby providing additional support to prices.

Rising shipping costs are also enhancing palm oil’s competitiveness compared to other vegetable oils, such as soybean oil from the United States and South America, which face longer shipping distances to Asian markets.

Hong Leong Investment Bank reported that CPO prices have surged by around 10% to RM4,592 per ton over the past week.

“The current increase in CPO prices is likely to support plantation companies’ financial performance in the short term, particularly upstream players with high leverage to CPO prices,” the research house stated.

However, analysts cautioned that uncertainty surrounding the duration of geopolitical conflicts remains a key risk to the sustainability of the price rally.

POGO Spread and Energy Outlook

Meanwhile, MBSB Research highlighted the movement of the palm oil–gasoil (POGO) spread, which may narrow as energy markets strengthen.

Rising gasoil prices, which correlate with crude oil, could encourage more aggressive biodiesel policies, including the potential acceleration of B50 implementation.

Gasoil prices are projected to remain above US$95 per barrel throughout the year, up approximately 7.3% from the 2025 average.

Despite this, MBSB maintains its 2026 average CPO price forecast at RM4,200 per ton.

Overall, current CPO price dynamics are influenced by a combination of energy market trends, biodiesel policies, and global geopolitical tensions.

While rising energy prices provide strong support to palm oil markets, global volatility and potential economic slowdown remain key challenges for the industry. (T2)