Biodiesel policy and crude oil price fluctuations in agri commodity markets: A systematic review

The increasing integration of biodiesel into the global energy system has triggered significant shifts across agricultural and energy markets. This study systematically reviews the empirical literature to assess how biodiesel policy interventions influence price volatility in the crude oil and agricultural commodity markets, particularly focusing on palm oil as a dominant biofuel feedstock. The objective is to evaluate the extent to which government instruments such as blending mandates, export levies and tax incentives affect trade dynamics, price transmission and market stability in major producing and consuming countries. Using a structured systematic literature review (SLR) methodology, 25 empirical studies published between 2013 and 2022 were identified and critically analysed. The review identifies three major outcomes: (i) descriptive patterns and characteristics of existing studies; (ii) the development of a conceptual framework linking biodiesel demand with crude oil and agri-commodity price volatility; and (iii) key policy implications for sustainability, food security and market stability. The review revealed that biodiesel policies significantly affect feedstock markets such as palm oil and soybean oil, with these effects amplified by crude oil price volatility. These interactions often lead to unintended consequences, particularly in major agri-commodity-producing countries. This study highlights the need for carefully balanced policies that promote renewable energy while mitigating adverse effects on food systems and the environment.