KUALA LUMPUR, Apr 20 — The government’s plan to raise the biodiesel mandate to B15 is expected to provide more stable domestic demand for palm oil, particularly during periods of weak global demand or heightened price volatility.
Malaysian Palm Oil Council (MPOC) chief executive officer Belvinder Sron said the move is a strategic step to address global fuel price uncertainty, following the increase in diesel prices at the pump from RM3.15 per litre on February 27 to RM5.97 per litre on April 17 amid escalating tensions in West Asia.
“The move could help ease cost pressures, strengthen domestic energy supply and support the country’s sustainability agenda.
“While the impact on fuel prices may not be substantial, the policy could reduce reliance on imported diesel by around five per cent,” she told Bernama.
On April 14, the government agreed to increase the biodiesel blend rate from B10 to B15, beginning with B12, to sustain the country’s diesel supply following the crisis in West Asia.
The move is aimed at avoiding excessive dependence on imported fossil fuels and external markets, as well as supporting economic restructuring through an accelerated transition to renewable energy.
Belvinder said the policy’s impact on palm oil supply and demand will depend largely on the pace and scale of the mandate’s expansion.
“The rollout of B12 would raise domestic consumption by an estimated 140,000 tonnes, while a move to B15 would require an additional 300,000 tonnes.
“Under both scenarios, total biodiesel consumption would account for only four to five per cent of Malaysia’s palm oil production in 2025, suggesting a relatively limited impact on exportable supply,” she said.
According to the Malaysian Palm Oil Board, Malaysia’s biodiesel production averaged around 1.05 million tonnes between 2020 and 2025, while exports averaged approximately 300,000 tonnes over the same period.
The country’s biodiesel consumption is therefore estimated to average 700,000 tonnes per annum under the B10 mandate, which has been in place since 2019.
On the broader crude palm oil (CPO) price outlook, Belvinder said current prices are mainly supported by elevated crude oil prices and stronger biodiesel blending activity, underpinned by a favourable palm oil-gas oil spread.
She added that exportable CPO supply is tightening across major producing countries as domestic demand increases.
“Malaysia has likewise increased its blending mandate. Collectively, 1 to 1.5 million tonnes of exportable palm oil supply is expected to be absorbed by stronger domestic biodiesel demand,” she said.
