Geopolitical tensions between the United States and Iran, coupled with rising crude oil prices, have driven palm oil to its highest level in nearly a month.
Kuala Lumpur palm oil futures advanced 0.7% to 4,635 ringgit per tonne, marking the highest price point since June 23rd.
The escalation in US-Iran military clashes, which has broadened beyond purely military targets to include infrastructure like bridges, utilities, and port facilities, has spurred a surge in Brent crude prices, subsequently lifting palm oil.
The fragile ceasefire agreement reached last month now appears unlikely to be restored in the short term.
As the world's most produced vegetable oil, palm oil is extensively used in food processing, consumer goods, and biofuels.
The recent rally in international oil prices has further highlighted palm oil's energy-related attributes.
Satya Varma, a senior analyst at Fast Markets Palm Oil Analytics, noted, "The escalating situation in the Middle East, driving a crude oil price rebound and higher war risk premiums, is providing upward support for palm oil."
He added that significant concurrent gains in vegetable oil futures on the Chicago and Dalian exchanges have provided additional momentum for palm oil prices.
With hostilities between US forces and Iran reigniting, the Strait of Hormuz is once again in crisis.
According to reports, sources indicate that traffic through the Strait of Hormuz has dropped to zero and that the strait will remain closed as long as the US continues its provocative actions, with Iran refusing to grant passage permits to any vessels.
Capital Economics has warned that a prolonged closure of the Strait of Hormuz could potentially send Brent crude prices soaring to $150 per barrel.
At the time of writing, WTI crude oil futures were up 2.75% at $84.03 per barrel, while Brent crude futures had risen 3.12% to $90.85 per barrel.
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