Global crude palm oil (CPO) prices could surge to US$1,500/tonne in the second half of 2026, driven by elevated crude oil prices, Indonesia’s planned rollout of B50 biodiesel and the prospect of El Niño disrupting production in major producing countries, according to industry analysts quoted in a Jakarta Globe report.
The bullish outlook came despite recent fluctuations in palm oil markets, with analysts expecting supply constraints and stronger biofuel demand to support prices until the end of the year, the 2 June report said.
Tungkot Sipayung, executive director of the Palm Oil Strategic Policy Institute (Paspi), said palm oil prices remained closely linked to developments in global energy markets, particularly crude oil, which had climbed amid geopolitical tensions in the Middle East.
“International CPO prices will depend on how long crude oil prices remain elevated," Sipayung said.
“Even if the conflict ends, many oil facilities and wells have been damaged and will require time to repair before production can fully recover.”
According to World Bank projections, Brent crude oil prices are expected to average US$86/barrel this year, significantly higher than the estimated US$69/barrel average in 2025.
Indonesia’s planned implementation of mandatory B50 biodiesel blending from 1 July was also expected to tighten global palm oil supplies.
The policy will increase domestic consumption of palm oil feedstock, potentially reducing export availability from the world’s largest producer, according to the report.
Forecasts of El Niño weather conditions in the latter half of 2026 could weigh on production in key producing countries, further supporting prices, the Jakarta Globe wrote.
“If El Niño materialises, supplies from producing countries usually decline,” Sipayung said.
“There may be periods when international CPO prices reach US$1,500/tonne between June and the end of this year.”
However, when energy prices normalised, buyers would adjust to higher palm oil costs and demand could soften, meaning the current period of strong prices might not extend beyond 2026, he added.
“Prices will gradually adjust as global oil prices decline,” he said. “And because palm oil becomes expensive, consumers will eventually reduce purchases.”
The World Bank forecasts average global CPO prices of US$1,089/tonne in 2026, up from US$1,007/tonne last year. Average prices stood at US$1,051/tonne during the first quarter, rising to US$1,148/tonne in April.
According to Indonesian Palm Oil Association (Gapki) data, average CIF Rotterdam prices reached US$1,356/tonne in January-March 2026, compared with US$1,230/tonne during the same period the previous year.
Despite the bullish outlook, Indonesia’s Trade Ministry had lowered the reference price used to calculate export duties and levies for June to US%1,029.51/tonne, down by 1.9% from May’s level of US1,049.58/tonne, the Jakarta Globe wrote.
Trade Ministry director general for Foreign Trade Tommy Andana attributed the decline to weaker demand from major importing countries, particularly India.
Against this backdrop, the Indonesian government was moving ahead with plans to centralise exports of strategic commodities under Danantara Sumberdaya Indonesia (DSI), which officially began operations on 1 June, the report said.
DSI was expected to fully implement a single-gate export system for strategic natural resources, including palm oil, starting from 1 January 2027.
