Can palm biodiesel provide quick relief for Malaysia amid Iran war?

A man holds a nozzle at the petrol station in Negri Sembilan.

Diesel in Peninsular Malaysia rose to 6.02 ringgit a litre for the week of April 2 to 8.

Photo: EPA Malaysia is facing renewed pressure to expand palm-based biodiesel as the Iran war drives up fuel costs, but industry and academic observers say high infrastructure costs and slow roll-out make it an unlikely source of quick relief.

That tension has sharpened as the government confronts a swelling fuel subsidy bill and greater exposure to imported supply shocks.

The finance ministry last month said petrol and diesel subsidies could reach 4 billion ringgit (US$903 million) a month with crude oil at about US$100 a barrel.

Prime Minister Anwar Ibrahim has noted that nearly half of Malaysia’s oil supply passes through the Strait of Hormuz, which is mostly closed off to maritime traffic due to the Iran war, and that the country imports more oil than it exports.

Diesel in Peninsular Malaysia rose to 6.02 ringgit a litre for the week of April 2 to 8, while the monthly subsidised RON95 quota under the BUDI95 scheme was cut from 300 litres to 200 litres.

The fuel shock has reopened a long-running debate over whether Malaysia should accelerate its stalled B20 biodiesel programme, a fuel blend consisting of 20 per cent biodiesel and 80 per cent petroleum diesel.

Workers transfer harvested palm fruits to a transport truck at a palm plantation in Pekanbaru.

Malaysia is projected to produce 20.2 million tonnes of palm oil in the 2025-26 season.

Photo: AFP Former commodities minister Teresa Kok said late last month that palm methyl ester had become cheaper than pure diesel at prevailing prices and urged the government to revive delayed depot upgrades.

B20 could be about 20 sen (4 US cents) a litre cheaper than B0 based on crude palm oil at 4,500 ringgit a tonne and Euro 5 diesel at US$220 a barrel, she added.

In a column published by English daily The Star last week, plantation industry expert Joseph Tek Choon Yee said the latest price surge had pushed Malaysia’s biodiesel debate “back into the daylight”, turning it into a more urgent economic question as imported diesel became costlier.

The issue is being watched beyond Malaysia because palm oil is key to both regional trade and global food supply chains.

US Department of Agriculture data shows Indonesia is expected to produce 46.7 million tonnes of palm oil in the 2025-26 season, while Malaysia is projected to produce 20.2 million tonnes.

The UN

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