KUALA LUMPUR: Malaysian palm oil futures closed higher and recorded a weekly gain on Friday, driven by a widening conflict in the Middle East.

The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange rose 123 ringgit, or 2.94%, to 4,305 ringgit ($1,021.35) a metric ton at closing. The contract logged a weekly gain of 6.27%, the highest since June 2023.

The palm oil market is experiencing a bull run, mirroring a rally in crude oil amid the conflict in the Middle East, a Mumbai-based trader with a global trade house said.

“Palm oil is now also trading at a premium to soybean and sunflower oil,” the trader said. Soyoil prices on the Chicago Board of Trade were up 0.92% at $44.94. Dalian’s vegetable oil markets were closed for China’s Golden Week holiday.

Sunflower oil is currently trading at 1,175.50 rupees ($14.00) per 100 kg on the National Commodity and Derivatives Exchange of India. Palm oil tracks price movements of rival edible oils, as they compete for a share of the global vegetable oils market.

The ringgit, palm’s currency of trade, slightly strengthened 0.07% against the dollar, making the commodity more expensive for buyers holding foreign currencies.

Oil prices rose further on Friday and were on track for strong weekly gains as investors weighed the prospect of a wider Middle East conflict disrupting crude flows against a well-supplied global market. Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.

India’s palm oil imports in September fell by nearly a third compared to the previous month, hitting a six-month low as a surge in tropical oil prices made it more expensive than rival oils, forcing refiners to postpone purchases, dealers said.

India on Thursday approved a 101 billion-rupee ($1.2 billion) programme to double edible oil production within seven years, aiming to reduce dependence on costlier imports.