A cost effective and less energy demanding method of producing ester oils or lubricant base oils, particularly fatty monoesters and fatty polyol esters, by esterifying palm fatty acid, which is abundant from the fat splitting process, with a monohydric alcohol or polyhydric alcohol in the presence of an acid catalyst at elevated temperature wherein an azeotroping agent, particularly toluene, is used to facilitate continuous removal by distillation, of water formed as a by-product during the esterification reaction. The esterification reaction is completed within 5 hours and palm fatty esters as produced with the current method exhibit comparable lubricity and biodegradability.