Severe Forest Fires in Indonesia May Disrupt Palm Oil Supplies

25-Aug-2026 03:45 PM

Jakarta: Severe forest fires have broken out across Indonesia, the world’s leading producer and exporter of palm oil, and the affected area continues to expand. Smoke from the fires is rapidly spreading to neighbouring countries, while oil-palm plantations are also coming under threat. This could disrupt palm oil supplies from Indonesia, raising concerns for India.

India imports the largest quantity of palm oil from Indonesia, a major Southeast Asian producer. If supply disruptions occur, Indian refiners and FMCG companies could face shortages of raw materials.

Forest fires have been reported in several parts of Indonesia, with southern Sumatra among the worst-affected areas. The region has vast oil-palm plantations, which are now at risk. Heavy rainfall in the area is also affecting palm plantations. Western Sumatra alone has recorded 1,429 fire hotspots. Fires are also spreading across the western and central parts of Kalimantan.

When forest fires affect large areas, palm oil production and exports are naturally impacted. With the festive season now beginning in India, concerns over possible disruptions to palm oil supplies have increased further.