21/04/2026 (The Edge Malaysia), Kuala Lumpur - Palm oil is among the sectors that has borne the brunt of ongoing geopolitical tension in the Middle East, primarily due to the weakening demand from Iran, according to Malaysia External Trade Development Corporation (Matrade) chairman Datuk Seri Reezal Merican Naina Merican.

During a media briefing on Tuesday, he said exports of palm oil and palm-based products to Iran tumbled 86.1% year-on-year to RM90 million in the first quarter of 2026. Palm oil and palm-based products accounted for 62.4% of Malaysia’s total exports to Iran during the period.

Beyond palm oil, Reezal Merican noted that petroleum products and agricultural exports had also been hit by the ongoing tensions. He added that disruptions to fertiliser supply — estimated at around 30% of global supply from Middle East — are affecting the agricultural sector.

Trade with West Asia declined 30.4% in the first quarter, with exports contracting 23.6%, reflecting lower shipments of palm oil, petroleum products and electrical and electronics goods.

However, the direct impact is limited as the region only accounted for only 2.7% of Malaysia’s total trade. Furthermore, it was offset by stronger export growth to non-conflict markets in Africa, Latin America and Central Asia, said Reezal Merican.

Nonetheless, he stressed that the conflict warrants close attention as indirect effects, such as higher goods prices, freight costs and war risk premiums, could weaken export competitiveness and broader trade outcomes.

“Our monitoring, coupled with industry intelligence, highlights that the ‘twin pressures’ from logistics disruptions and raw material availability are affecting the business landscape. These renewed cost pressures have pushed overall operating costs up by 10% to 30% for more than half of our businesses,” Reezal Merican explained.

Matrade ramps up mitigation efforts to support exporters

In response to these challenges, he said Matrade is stepping up mitigation efforts by leveraging its global network of overseas offices as “frontline intelligence hubs” while expanding into non-conflict markets. 

“Firstly, we are leveraging our extensive global network by repurposing our 47 overseas offices into ‘frontline intelligence hubs’. These offices are no longer just promotional centres; they now act as our eyes and ears on the ground, capturing real-time data.

"We are also focusing on non-conflict markets to enhance access and expand into new opportunities," he noted. 

Reezal Merican also highlighted that trade commissioners have been given an urgent mandate to monitor and facilitate trade flows daily, ensuring exporters receive real-time insights on port connectivity and potential disruptions before they become critical bottlenecks.

Trade commissioners are identifying tactical solutions by providing regular updates on how exporters can divert cargo to stable regional hubs and ports such as Salalah or Sohar in Oman, while also exploring alternative land and rail routes to bypass maritime chokepoints.

"Under our revised terms of reference, the role of the trade commissioners has expanded to focus on new export opportunities arising from geopolitical tensions, while positioning Malaysia as an alternative sourcing destination.

"They are actively identifying emerging supply gaps and seeking alternative raw materials globally to support Malaysian industries to sustain production as some traditional supply chains are disrupted," he added.

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