Why Are China and India Not Rushing to Buy Indonesian Palm Oil Amid Iran Conflict?
Jakarta — Indonesia’s crude palm oil (CPO) exports to its two principal markets, China and India, remain flat despite ongoing global geopolitical tensions stemming from the conflict involving the United States, Israel, and Iran, which continues to spread across the Middle East region.
Countries worldwide are preparing contingency measures against the potential ripple effects of the escalating war. Concerns about an energy crisis have prompted several nations to restrict their purchases of petroleum products. Palm oil can serve as an energy source, particularly in the production of biodiesel.
However, Eddy Martono, chairman general of the Indonesian Palm Oil Producers Association (Gapki), stated that no spike in Indonesia’s palm oil exports to either China or India has materialised to date.
“With the Middle East representing 1.8 million tonnes of our total exports there, we have yet to see any increase in demand. I see no increase in exports to either India or China,” Martono said during a press conference at the Ministry of Agriculture offices in Jakarta on Wednesday, 11 March 2026.
He explained that one factor is that China and India do not rely solely on palm oil as their vegetable oil source. Both countries use alternative vegetable oils as well.
“They do not use only palm oil. They also use sunflower oil and soybean oil,” he clarified.
According to Martono, this situation means that Indonesia’s palm oil import requirements have not increased, particularly as vegetable oil stocks in these countries are estimated to remain adequate.
“At the moment, their stocks are likely still substantial. Therefore, they have not shown signs of importing CPO from Indonesia, as the conflict is still relatively new,” he said.
Despite these conditions, Martono noted that Indonesia’s palm oil exports continue to operate. However, the industry faces new challenges from increased logistics costs and shipping insurance premiums resulting from the global conflict.
“Given the war and the current global situation, we are grateful that palm oil exports continue, albeit with extraordinary cost increases. Logistics and insurance costs have risen approximately 50 percent,” Martono stated.
He acknowledged that this cost surge has also affected new purchase enquiries from buyers, as shipping prices have become significantly more expensive.
“Why is this the case? Because the costs have risen. What we are currently doing is fulfilling contracts we have already signed, but there has been a slight decline in new orders. Unless they are in genuine need. However, there is little we can do,” he explained.
Nevertheless, Martono emphasised that Indonesian CPO exports continue, albeit via longer shipping routes and with increased transportation costs.
“Regarding the war, there is nothing we can do, as we cannot control them to stop fighting, but thank goodness palm oil exports still continue. Although we may take longer routes and face higher costs, we still proceed. However, we cannot deny that demand has declined somewhat,” he said.
He expressed hope that this situation would be temporary and that demand would return to normal once the global situation improved.
“We shall see how long this lasts. Hopefully, once the war ends, demand will return to normal, particularly with the 50 percent increase in transport and insurance costs,” Martono said.
Martono also noted that global CPO prices have not experienced significant rises and currently remain around US$1,100 per tonne, or approximately IDR 18.5 million per tonne (based on an exchange rate of IDR 16,866 per US dollar).
“There has been no significant price increase yet; prices currently remain around US$1,100 per tonne,” he concluded.