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

A war in Europe. A blockade in the Red Sea. Flooded fields in Brazil. 

None of these events were isolated. Together, they've created the most sustained disruption the edible oils trade has faced in decades. India, the world's largest importer, is at the center of the storm. 

As per estimates, India's edible oil imports had fallen to a four-year low by February 2025, with stock levels dropping to just 1.87 million tons, the lowest in over three years. But this is just one indicator of a much deeper, more structural shake-up. 

What was once a predictable supply chain is now being reshaped by political, climatic, and logistical upheavals. India is absorbing the brunt of the impact, and the implications extend far beyond procurement costs. 

The Supply Chain Was Built for Predictability, Until Now 

Until recently, oil procurement followed a familiar rhythm: reliable shipping routes, seasonal price corrections, and predictable supplier relationships. Since the Ukraine war in 2022, every link in the chain has been tested and broken. 

According to Indonesia's Ministry of Agriculture, palm oil exports dropped 24% month-over-month in January 2025 as the B40 biodiesel program increased mandatory blend rates from 35% in 2024 to 40%. This policy shift redirected up to 1.7 million metric tons to domestic fuel blending, placing further pressure on international availability. 

In Ukraine, data from the Ukrainian Grain Association shows sunflower oil exports fell 24% year-over-year by March 2025, reaching their lowest level since 2016–2017. This drop stems from ongoing conflict and persistent raw material shortages that continue to limit production capacity. 

The cascading effects are now structural.

• Delivery delays and port congestion have become routine across key trade routes 

• Recent analyses indicate freight and insurance costs have risen 150-200% on Red Sea routes 

• Export reliability from previously stable suppliers has declined, with supply shocks occurring 3x more frequently than pre-2022 levels 

• Importers are operating on tighter margins with increasingly reactive inventory strategies 

These disruptions aren't cyclical. They are reshaping the edible oil supply map permanently. 

India: Where Global Shocks Converge 

India consumes over 25 million metric tons of edible oils annually, with imports meeting 60% of domestic demand. The country primarily sources palm oil from Indonesia and Malaysia, sunflower oil from Ukraine and Russia, and soybean oil from Brazil and Argentina. 

1. Ukraine: The Sunflower Oil Chokepoint 

Before 2022, Ukraine controlled 52% of global sunflower oil exports. According to the Ukrainian Grain Association, output remains 20% below pre-war levels despite partial recovery in 2024. Persistent geopolitical risk in the Black Sea has kept the supply chain fragile, with prices surging over 40% since the invasion. 

2. Red Sea: A Maritime Chokepoint Under Siege 

Data from the International Maritime Organization shows Houthi attacks have rerouted 70% of shipping traffic around the Cape of Good Hope, adding 10-20 days to delivery times. Research studies show freight costs have inflated by 150-200%, while insurance premiums have spiked 15-20% with limited carrier availability tightening capacity for major importers. 

3. Brazil and Argentina: Climate and Political Volatility 

According to Brazil's National Supply Company (CONAB), floods disrupted soybean harvests by 15%, while labor protests in Argentina reduced processing capacity by 25%. As per Mordor Intelligence analysis, India's soybean oil imports dropped 36% year-on-year in February 2025, creating ripple effects across Asia-Pacific. 

4. Sudan: Agricultural Collapse in Secondary Markets 

The UN Food and Agriculture Organization reports that Sudan's civil conflict has caused a 60% decline in groundnut and sesame production, particularly in key producing regions, due to insecurity, displacement, and disruption of agricultural operations. 

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