InfoSAWIT, NEW DELHI – India, the world’s largest vegetable oil importer, is cutting imports significantly as global prices surge and an energy crisis—triggered by conflict in Iran—disrupts supply chains.

Energy supply disruptions across the Middle East have caused fuel shortages in several Asian countries, including India. This situation has directly impacted the food service sector, a major consumer of vegetable oils.

In major cities such as New Delhi, Mumbai, and Bangalore, many restaurants and catering businesses have reduced operations due to limited LPG supplies. Some have even switched to alternative fuels such as kerosene and firewood.

Demand Falls by Up to 300,000 Tons Per Month

According to Aashish Acharya of Patanjali Foods Ltd., around 40% of India’s vegetable oil consumption comes from hotels, restaurants, and catering. Weakness in this sector has directly reduced national demand.

“Vegetable oil demand is estimated to decline by around 250,000 to 300,000 tons per month, and could fall further if the conflict continues and LPG supply remains constrained,” Acharya said, as reported by Bloomberg and quote by InfoSAWIT on Friday (April 3, 2026).

He noted that the situation highlights the strong link between global geopolitical dynamics and domestic consumption patterns.

Pressure is also coming from rising import costs. Domestic vegetable oil prices in India have surged by up to 17% in the past month, driven by currency depreciation, higher logistics costs, and increased freight rates.

Meanwhile, Mayur Toshniwal of Emami Agrotech Ltd. said import costs have risen by around 25%.

“With prices this high, demand will naturally decline as market players are reluctant to build inventories,” he explained.

The decline in India’s consumption poses significant challenges for global vegetable oil producers, including palm oil exporters such as Indonesia and Malaysia.

Data from the Solvent Extractors’ Association of India shows that vegetable oil imports fell to around 1.2 million tons in March, down from 1.32 million tons in February.

“Urban demand will remain under pressure in the near term due to LPG shortages,” said B.V. Mehta.

Changing Consumer Behavior

Amid the crisis, Indian consumers are shifting toward more home cooking. Household use of soybean oil, sunflower oil, and rapeseed oil has increased, although overall demand remains weak.

Market players are also avoiding stockpiling due to high prices.

“Demand is currently ‘hand-to-mouth’ as buyers prefer not to hold inventory at elevated price levels,” Toshniwal added.

With geopolitical uncertainty still ongoing, the global vegetable oil market is expected to remain under pressure—especially if the energy crisis continues to disrupt supply chains and consumption in key markets like India. (T2)