Palm oil climbed for a second day as a surge in crude prices fueled by renewed US-Iran hostilities brightened demand prospects for biofuels. The benchmark contract on the Bursa Malaysia Derivatives Exchange advanced, tracking gains in rival vegetable oils and energy markets.

Traders said the escalation in Middle East tensions lifted Brent crude, making palm oil more attractive as a feedstock for biodiesel. Stronger mineral oil prices typically improve the economics of blending mandates in major consuming nations like Indonesia and Malaysia, the world's top producers.

The rally comes as inventories in Malaysia show seasonal declines, while export demand from India and China remains firm. Analysts note that any sustained increase in crude above key technical levels could trigger additional buying interest from biofuel producers seeking to lock in margins.

Market participants are also monitoring weather patterns in Southeast Asia, where dry conditions could affect near-term output. The interplay between geopolitical risk premiums in energy markets and agricultural supply fundamentals continues to drive volatility across the edible oil complex.