Rising geopolitical tensions in the Gulf region are beginning to affect India’s edible oil industry, with industry representatives warning of longer-term challenges linked to supply disruptions and cost pressures.
The Solvent Extractors’ Association of India (SEA) has said that ongoing volatility, particularly developments involving the United States and Iran, is creating an uncertain environment for trade and logistics. In his monthly communication to members, SEA President Sanjeev Asthana noted that conditions in the Gulf region remain fluid, affecting planning and operations for the sector.
He said that although a temporary ceasefire and the brief reopening of the Strait of Hormuz had provided some initial relief, the situation has since become unclear, with intermittent disruptions and mixed signals continuing to impact shipping activity. The Strait of Hormuz is a critical route for global energy and commodity flows, and any disruption has a direct effect on freight movement and costs.
Asthana pointed out that shipping routes remain exposed to risk, while freight charges have stayed elevated. As a result, trade flows of edible oils and oil meals have become less predictable, making it more difficult for businesses to plan procurement and distribution.
The impact has also extended to input costs. Prices of crude-linked derivatives such as polyethylene and polypropylene, which are widely used in plastic packaging, have risen sharply by around 50 to 60 per cent since the start of the conflict. These materials are essential for bottles and packaging used in the fast-moving consumer goods (FMCG) sector.
Packaging typically accounts for 15 to 25 per cent of the total cost of edible oil products. As a result, any sustained increase in packaging material prices can directly affect overall product pricing, adding to cost pressures across the supply chain.
Asthana said that continued geopolitical uncertainty could have longer-term implications for the edible oil sector if disruptions persist. However, he added that the industry remains hopeful that ongoing diplomatic efforts will help stabilise the situation and support smoother global trade conditions in the coming months. |
