Edible Oils in Crisis: How Global Conflicts Are Reshaping India's Supply Chain

A war that has reached the Black Sea ports. Renewed attacks around the Red Sea. A conflict that has choked the Strait of Hormuz. A biodiesel mandate in Indonesia that keeps more palm oil at home. 

None of these events was isolated. Together, they have kept the edible oil trade under pressure since 2022, and India, the world's largest importer of edible oils, sits where they converge. 

India imported about 16 million tonnes of edible oil in the 2024-25 oil year (November–October), spending nearly ₹1.61 lakh crore (about US$18.6 billion), 22% more than a year earlier even though volumes were flat. That gap between volume and cost is the story of the past two years: the supply chain has mostly kept moving, but it has become more expensive, more volatile and harder to plan around. 

How India's Supply Picture Changed 

India uses roughly 28–29 million tonnes of edible oil a year. In 2024-25 imports covered a little over half of that, and official import dependence stood at 56.25% in 2023-24. Palm oil comes mainly from Indonesia and Malaysia, soybean oil from Argentina and Brazil, and sunflower oil mainly from Russia, followed by Ukraine. 

The early months of 2025 showed how quickly that system can tighten. Imports fell to a four-year low of 899,565 tonnes in February 2025, and port and pipeline stocks dropped to 1.87 million tonnes on 1 March. By 1 June, stocks were down to 1.33 million tonnes, a five-year low, before refiners rebuilt them over the summer. 

What changed most was the mix, not the total. Palm oil lost its usual price discount through late 2024 and early 2025, and buyers switched: in November 2024–February 2025, soft-oil imports rose to 2.68 million tonnes from 1.57 million tonnes while palm imports fell 34%. Soybean oil imports ended 2024-25 at a record 5.47 million tonnes. When palm became cheap again in mid-2025, refiners moved back just as fast: SEA data show palm imports jumped about 61% in June 2025 to 955,683 tonnes. 

That pattern has continued in 2026. Palm oil imports in November 2025–July 2026 were 11.5% higher than a year earlier, and July 2026 imports reached 1.48 million tonnes, the highest since September 2025, as refiners stocked up for the festival season. 

1. Black Sea: Sunflower Supply Under Fire

Before 2022, Ukraine supplied about half of the world's sunflower oil exports. Its position has since eroded. Drought cut its sunflower seed harvest to about 12.4 million tonnes in 2024, and the 2025 crop was forecast near a ten-year low. In 2025/26, Russia overtook Ukraine as the world's largest sunflower oil exporter for the first time in two decades, with Ukraine's share falling to about 30%. 

The war has now hit the export route itself. Strikes on port and storage facilities around the Black Sea and Sea of Azov in August and September 2026 delayed loadings, and about 150,000 tonnes of India-bound sunflower oil were held up in August. Ukrainian industry executives expect only around 300,000 tonnes to leave Ukraine between October 2026 and March 2027, roughly half the usual flow. 

India has adjusted rather than gone short. It remains Russia's largest buyer, and when Russian volumes fell, Indian refiners bought more from Argentina and Europe. Sunflower oil imports in November 2025–August 2026 were about 2.5 million tonnes, slightly above the year before. The cost is in price: crude sunflower oil landed in India at an average $1,496 a tonne in August 2026, 18% higher than a year earlier. 

2. Red Sea and Hormuz: Shipping Risk Returns

Houthi attacks pushed most shipping away from the Red Sea in 2024, and Suez Canal transits stayed 57–64% below 2023 levels through 2025. War-risk insurance rose roughly sevenfold to tenfold at the peak, from about 0.1% of a ship's hull value to 0.7–1%. A pause in attacks after the Gaza ceasefire brought premiums down to about 0.2% by December 2025. 

2026 has been mixed. Suez traffic has recovered strongly, with 1,232 transits in August, the busiest month since December 2023 but still 39% below pre-crisis levels, and several major container lines have restored selected services. At the same time, the Houthis declared an embargo on Saudi-linked shipping in July and seized the port of Mocha in September. 

Separately, the war involving Iran that began on 28 February 2026 has repeatedly disrupted the Strait of Hormuz. In July 2026, broker Marsh put war-risk premiums for Hormuz transits at 7.5–10% of hull value. 

For India's edible oil trade, these routes matter in specific ways. The Red Sea route is relevant mainly to Black Sea sunflower oil; palm oil from Southeast Asia and soybean oil from South America do not use it. Hormuz does not carry edible oil to India, but its effect on crude oil prices feeds directly into the next force. 

3. Indonesia: Biodiesel Takes A Bigger Share

Indonesia raised its biodiesel blend from B35 to B40 in January 2025 and moved to B50 on 1 July 2026, after the energy shock made palm-based diesel cheaper relative to fossil diesel. GAPKI, the Indonesian palm oil association, estimates that B50 adds about 1.9 million tonnes of domestic crude palm oil demand, bringing biodiesel use to about 14.6 million tonnes. Shipping analysts at Drewry expect this to limit palm oil's traditional price advantage over soybean oil in the second half of 2026. 

For Indian buyers, this means palm oil can no longer be assumed to be the cheap default. Crude palm oil landed at $1,259 a tonne in August 2026, up 9% year on year and only slightly below crude soybean oil at $1,289. 

4. India's Own Policy: Duty Swings and A Domestic Push 

New Delhi has changed edible oil import duties three times in two years, and each change has shifted prices and the mix of crude and refined imports. 

India's Import Duty

*Effective duty includes the Agriculture Infrastructure and Development Cess and Social Welfare Surcharge. Sources: PTI, GKToday, Angel One. 

The September 2026 cut came as vegetable oil prices had risen nearly 20% in a year and India's retail inflation reached 4.82% in August, with food inflation at 5.95%. The steeper cut for sunflower oil is aimed partly at southern India, where it is the main cooking oil. 

Two other policy threads matter for procurement planning. First, duty-free refined oil from Nepal under the South Asian Free Trade Area (SAFTA) reached 5.96 lakh tonnes in November 2025–August 2026, mostly soybean oil refined from imported crude. Second, the National Mission on Edible Oils aims to raise oilseed output from 39 million tonnes in 2022-23 to 69.7 million tonnes by 2030-31, which would lift domestic edible oil production to 25.45 million tonnes, about 72% of projected demand. Oil palm area reached 6.40 lakh hectares by March 2026. These programmes will take years to change import needs materially. 

The Strategic Question: Is This the New Normal or a Temporary Storm? 

The critical question facing procurement leaders isn't whether to adapt, it's how quickly and how fundamentally. We're observing three distinct strategic responses emerging among India's major players: 

• Reactive Adaptation: Short-term contract adjustments and supplier switching  

• Strategic Diversification: Geographic and product portfolio restructuring 

• Systemic Resilience: End-to-end supply chain reimagining with scenario planning 
  

Procurement Evolution: From Optimization to Resilience 

Procurement strategies are evolving from cost optimization to resilience planning. Global buyers are no longer operating on historical pricing or static contracts; they're moving toward dynamic, scenario-based planning. 

Strategic Response Framework 

Source: Mordor Intelligence

According to industry sources, major Indian players like Adani Wilmar and Ruchi Soya are reconfiguring their sourcing models, logistics networks, and formulations. Ingredient substitution is no longer a contingency plan, it's a continuity imperative. 

Two Scenarios for India's Edible Oil Future

Scenario 1: Prolonged Tightness

• Black Sea port strikes continue, keeping Ukrainian sunflower oil exports well below normal through the 2026-27 season.
• Indonesia holds B50 and global palm oil stocks stay tight, so palm keeps trading close to soybean oil.
• Red Sea and Hormuz risk stays elevated, keeping freight and insurance costs high. 
• Strategic Implication: Buyers who can switch oils and origins quickly protect margins; those locked into one oil absorb the volatility. 

Scenario 2: Gradual Easing 

• Security around Black Sea ports improves and Ukrainian shipments recover toward normal levels.
• Higher palm prices lead Indonesia to adjust its blending pace, freeing more oil for export.
• Red Sea traffic continues its recovery and war-risk premiums fall.
• Strategic Implication: Prices ease, and buyers who used the volatile period to diversify sourcing keep a cost and reliability advantage.
            

Executive Takeaways: Three Strategic Imperatives 

The edible oils market disruption represents more than supply chain volatility, it's a fundamental shift requiring strategic recalibration. Based on our analysis, three imperatives emerge: 

1. Embrace Scenario-Based Planning 

Build procurement plans that can pivot between oils, origins and pricing mechanisms as geopolitical, policy and weather signals change. 

2. Invest in Supply Chain Intelligence 

India's duty changes and Indonesia's biodiesel mandates have moved prices as much as any supply shock. Monitoring them should be part of routine market intelligence. 

3. Redefine Competitive Advantage 

In a market where relative prices flip often, the ability to change formulations and suppliers quickly is worth more than a marginally lower contract price. 

Want to Dive Deeper into These Trends? 
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