Palm Oil Industry Outlook Q2 2026: Geopolitical Disruptions and the Resilience of the Palm Oil Industry Amid the Energy Transition

Indonesia Palm Oil Strategic Studies (IPOSS) has released the Q2 2026 Palm Oil Outlook, which shows that in the second quarter of 2026, the palm oil market will become increasingly sensitive to global energy dynamics amid geopolitical disruptions due to the escalating conflict between Iran vs. United States and Israel. In this outlook, global CPO prices are projected to increase from approximately USD 1,165 per ton in March 2026 to around USD 1,440 per ton in April, then increase further to about USD 1,701 per ton in May, and are expected to reach approximately USD 1,783 per ton in June 2026. This rise is primarily driven by increases in global crude oil prices, disruptions in energy distribution, and rising risk premiums due to the escalation of the conflict involving Iran vs. the United States and Israel in the global market.

These price pressures indicate that CPO is now increasingly influenced by the growing interdependence between the vegetable oil markets and the energy markets. As crude oil prices rise, biodiesel becomes relatively more competitive compared to fossil fuels, while global logistics and distribution costs also increase. In this context, CPO prices are no longer determined solely by traditional factors such as production and exports, but also by market expectations regarding palm oil’s role as an alternative energy commodity.

In the domestic market, the escalation of the war is also expected to contribute to a rise in local CPO prices. In March 2026, the domestic CPO price stood at approximately Rp15,065 per kg, and is projected to rise to around Rp18,776 per kg in April 2026. However, domestic price formation does not merely follow the strengthening of international prices but is also influenced by the Reference Price (RP), Export Levy (EL), and Export Duty (ED) mechanisms that determine export parity prices in the domestic market.

This outlook also indicates that these price increases are occurring when the flexibility of the national palm oil market is not fully tightened. National production faces moderate pressure due to the continuing impact of hydrological disruptions in late 2025 and early signs of a dry season in several production centers. Therefore, the price outlook for Q2 2026 must be interpreted within a broader context—as the result of the combination of supply–demand conditions, climate risks, rising domestic consumption, and global geopolitical dynamics. Through the Palm Oil Outlook Q2 2026, IPOSS hopes this publication will become a strategic reference for the government, industry players, academics, the media, and other stakeholders in understanding the direction of Indonesia’s palm oil industry. This outlook emphasizes that the price increase in Q2 2026 is not merely a short-term market phenomenon but rather part of a broader shift in the relationship between palm oil, energy, trade, and global geopolitics.