Oil prices fell 16.5% in a week to a 3.5-month low, adding pressure to vegetable oil markets

August Brent crude futures have fallen 16.5% in the past seven days to a 3.5-month low of $79/barrel. They have lost 36% in the past month and are currently trading just 14.5% above their pre-war levels. The main factors behind the decline were reports of a ceasefire agreement between the US and Iran, as well as plans to open the Strait of Hormuz to shipping and resume Iranian oil exports.

 

The peace agreement is scheduled to be signed in Switzerland on June 19. This will be followed by 60 days of negotiations on Iran's nuclear program. At the same time, market participants are taking into account the risk of renewed military confrontation in the absence of agreements on the nuclear issue.

 

According to Kpler, nearly 600 ships remain blocked in the Persian Gulf waiting to pass through the Strait of Hormuz, while hundreds of other vessels are waiting on the opposite side. The company also estimates that about 68 million barrels of Iranian crude oil cannot currently be shipped due to logistical constraints.

 

Despite the sharp drop in oil prices, vegetable oil markets have so far reacted rather cautiously. Moreover, palm oil prices have even shown growth, although there are few fundamental factors for a significant increase in prices at the moment.

 

July palm oil futures on Bursa Malaysia were mostly down during the week, but rose 2% to 4,578 ringgit/t or $1,126/t at the end of trading, ending the week up 1.1%. The market was supported by reports of a 9.6-23.8% increase in Malaysian palm oil exports between June 1 and 15.

 

At the same time, the fundamental situation remains less optimistic. Palm oil stocks in Malaysia increased by 5.2% in May, indicating a build-up of supply in the market.

 

July soybean oil futures on the CBOT exchange fell by 2.7% to $1,608/t in the week, and lost 7.5% in two weeks. The market is reacting rather slowly to the collapse in oil prices and the reduction in soybean processing volumes in the US, receiving support from the reduction in soybean oil stocks and the temporary shutdown of some processing plants for preventive work.

 

According to the NOPA association, soybean processing in the US in May amounted to 5.68 million tons, which is 1.4% less than in April, but 8.3% more than in May 2025. At the same time, soybean oil stocks as of May 31 decreased by 12% compared to April to 787 thousand tons, which was the lowest figure in the last five months.

 

Prices in the Asian market also showed negative dynamics. Prices for soybean oil in Dalian (China) for June delivery decreased by $10/t to $1,225/t in a week, while in the Brazilian spot market, quotes fell by $15/t to $1,210–1,225/t FOB.

 

The situation on the sunflower oil market remains relatively stable. Indian bid prices have been stable at $1,420/t CIF Mumbai over the past week. At the same time, Russian sunflower oil bid prices have increased by $10–15/t to $1,300/t FOB.

 

In Ukraine, demand prices for sunflower oil delivered to Black Sea ports decreased by $5–10/t to $1,310/t in a week, reflecting a general weakening of sentiment in the global vegetable oil market.

 

The approaching rapeseed processing season is putting additional pressure on the market. The increase in rapeseed oil supply is leading to a decrease in demand prices, which in turn is negatively affecting the EU sunflower oil market. This factor is expected to increase pressure on the Ukrainian market in the near future.

 

Given the rapid decline in oil prices, rising palm oil inventories, and increasing supply of rapeseed products, the risks of further declines in vegetable oil prices will remain high in the coming weeks.