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Middle East conflict poses challenges for Indonesia's palm oil industry

Indonesia is currently the world's largest producer and exporter of palm oil. In 2025, the country exported palm oil to 177 countries, totaling 32.34 million tonnes valued at 35.87 billion USD.

Jakarta (VNA) – The ongoing conflict involving Iran is expected to create both opportunities and challenges for Indonesia's palm oil industry, amid volatile global commodity prices and escalating transportation costs.

Indonesia is currently the world's largest producer and exporter of palm oil. In 2025, the country exported palm oil to 177 countries, totaling 32.34 million tonnes valued at 35.87 billion USD.

China remains the largest market, with nearly 6 million tonnes, worth 6.76 billion USD, followed by India (3.97 million tonnes, valued at 4.16 billion USD) and Pakistan (3.23 million tonnes, worth 3.32 billion USD).

According to Tungkot Sipayung, Executive Director of the Palm Oil Agribusiness Strategic Policy Institute (PASPI), geopolitical tensions in the Middle East could push up crude palm oil (CPO) prices, providing short-term benefits for Indonesia.

However, he also warned that if the conflict continues, market factors could become more volatile, increasing uncertainty for exports.

Most Indonesian palm oil is exported to China, India, Pakistan, and Bangladesh – regions not directly affected by the conflict. This somewhat mitigates the risk of a short-term drop in demand. However, prolonged conflict could disrupt global supply chains and affect international shipping routes, thereby having a ripple effect on exports, he stated.

Chairman of the Indonesian Palm Oil Producers Association (Gapki) Eddy Martono said that logistics and insurance costs have increased significantly since tensions escalated, sometimes rising by as much as 50%.

He further stated that if the fighting lasts for up to three months, it will definitely affect Indonesia’s palm oil export performance, as importing countries might reduce their CPO purchases due to higher logistics and insurance costs./.

VNA
#Indonesia #transportation costs #palm oil #Middle East conflict Indonesia
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