Jakarta. A prolonged Iran war would have both positive and negative effects on Indonesian palm oil exports, according to a think tank.

Indonesia is the world’s largest palm oil supplier.  China has been buying up Indonesian palm oil. In 2025, Indonesia’s palm oil exports reached 177 countries. China was the main buyer, importing almost 6 million tons worth $6.76 billion. Almost a month has passed since Israel and the US launched an attack on Tehran. There is also no sign of the war abating.

Tungkot Sipayung, the executive director of the Palm Oil Agribusiness Strategic Policy Institute (Paspi), said that the war could raise crude palm oil (CPO) prices, thereby benefiting Jakarta. 

“If this war doesn’t last too long, the price hike might not be too significant. It could reach $1,300 per ton, so there is a tendency to rise. On average, [CPO] is around $1,200 per ton. Other vegetable oils even reach between $1,300 and $1,400 a ton,” Tungkot said.

“Maybe palm oil will follow if the conflict isn’t finished any time soon.”

Tungkot went on to say that Indonesia’s palm oil exports mainly go to China, India, Pakistan, and Bangladesh — all regions “not significantly affected by the war”, hence minimizing the blow on the overall palm oil export performance. However, a prolonged war can affect global shipments, including those coming from Indonesia, according to Tungkot.

The Indonesian Palm Oil Producer Association (Gapki) admitted there had been logistics cost hikes following the conflict. Gapki chairman Eddy Martono said that the logistics and insurance costs had even soared by up to 50%.

“If the fighting lasts for up to three months, it will definitely affect our palm oil export performance. Importing countries will certainly reduce their CPO purchases. With a 50% increase in logistics and insurance costs, it seems to have inflicted a slight impact,” Eddy said.

China has topped the list of Indonesia’s palm oil export destinations. Followed by India (3.97 million tons/$4.16 billion) and Pakistan (3.23 million tons/$3.32 billion). Indonesia's palm oil exports totaled 32.34 million tons, worth around $35.87 billion.

Gapki data showed CPO prices as of March 18 reached $1,510 per ton CIF Rotterdam. Malaysian CPO futures reached RM4,432 per ton as of March 2025.