Hanoi (VNA) - The escalating conflict in the Middle East has driven logistics and insurance costs for Indonesia’s palm oil exports up by about 50%, according to the Indonesian Palm Oil Association (Gapki).
Speaking to reporters on March 11, Gapki Chairman Eddy Martono said the conflict, which intensified after coordinated strikes by the US and Israel on Iran’s capital Tehran late last month, had disrupted key maritime routes through the Strait of Hormuz. As a result, some cargo vessels were delayed or forced to take longer alternative routes, raising transport expenses and maritime insurance premiums.
Martono said Indonesia had continued to ship palm oil despite the hostilities, although higher costs could dampen demand. He noted that crude palm oil remained an essential commodity for many importing countries, leaving buyers with limited alternatives.
According to Gapki data, the Middle East imported around 1.8 million tonnes of Indonesian palm oil last year, accounting for roughly 5% of the country’s total exports. Saudi Arabia remained the largest market with shipments of about 651,000 tonnes, followed by the United Arab Emirates at 475,000 tonnes and Oman at 219,000 tonnes.
However, heightened security risks in the Strait of Hormuz have temporarily disrupted exports to Iran and the United Arab Emirates. Shipments to Saudi Arabia, as well as to major markets such as India and China, have continued.
Martono added that Indonesian exporters are currently focusing on fulfilling previously signed contracts, while some international buyers had delayed new deals due to uncertainties stemming from the conflict. He said a clearer assessment of the export slowdown could be available by the end of March.
Indonesia is the world’s largest producer of palm oil, a key agricultural commodity that plays a significant role in supporting the country’s trade surplus. Coordinating Minister for Economic Affairs Airlangga Hartarto was cited as saying that the overall impact on export performance would largely depend on how long the conflict persists./.
