Following a move by Indonesia’s government to ban crude palm oil from being exported from the country, 2 ships were caught trying to smuggle the product to India and the United Arab Emirates. There has been a palm oil shortage in Indonesia for the past month since the Russia-Ukraine crisis has impacted the supply of vegetable oil in the country, making palm oil more expensive.
The price of CPO in Indonesia spiked from US$0.96 to US$1.03 per litre, to US$1.52 per litre. Indonesian farmers have supported the CPO export ban, saying it’s necessary for supply and affordability of cooking oil in the domestic market.
But the ban could threaten food prices across the globe, and place extra pressure on already steep cooking oil prices worldwide. Palm oil is only grown in the tropics, and is by far the most consumed and traded edible oil in the world. It is used to make detergents, margarine, soaps, chocolates, cakes, and cleaning products, among other things.
Illegally shipping cooking oil abroad is allegedly one of the reasons for Indonesia’s dramatic price hike. The ships recently caught smuggling CPO out of Indonesia were found in the Indonesian part of Malacca strait waters, and in west Kalimantan waters.
The tanker in Malacca straight waters was headed for India, and owned by a Russian national. The ship is suspected of being inconsistent about what it was carrying, verses what its documents said. The ship is suspected of criminal offences for illegally carrying methanol cargo while not equipped with documents for transporting dangerous goods.
The tanker in west Kalimantan waters was headed for the UAE, and had a Chinese captain with 24 crew members. It was transporting illegal 13,357,425 metric tonnes CPO and 98 drums of methanol.