Why olive oil prices have soared

In brief. The surge in olive oil prices comes down to a simple but brutal equation: a collapsed supply against a maintained demand. Several seasons marked by drought and heat in the major producing basins (Spain first among them) sent world harvests plunging, emptying carryover stocks. When supply is short and demand holds, the price rises — mechanically. Since then, an easing has begun as harvests recover, but prices remain above their pre-crisis levels. In this context, Tunisia, buoyed by a record season, comes out ahead as the origin with the best quality-to-price ratio.

No food product has generated as much talk about its prices as olive oil in recent years. For a buyer, understanding why this surge happened is better than enduring the prices: it makes it possible to anticipate, secure volumes and choose the right origin. Here is the explanation, factor by factor — with the caution a dated subject demands.

Why has the price of olive oil risen so much?

The price of olive oil soared because global supply collapsed — drought and heat having sharply reduced the harvests of several seasons — while demand remained sustained. This imbalance emptied stocks and pushed prices to peaks, before a gradual easing as production recovers.

It is an almost perfect illustration of the law of supply and demand on a strained agricultural market, without enough buffer stock to absorb the shock. Let's break it down.

Factor 1 — Climate, the trigger of the crisis

The starting point is meteorological. The olive tree is sensitive to water stress and heatwaves at the moment of flowering and fruit set. Several seasons cumulated:

• prolonged droughts in southern Europe;
• spring heatwaves, killing the flowers and reducing fruit set;
• rainfall insufficient for fruit filling.

Spain, the world's leading producer, was particularly hit: its harvests fell well below normal over several years. And when the biggest basin coughs, the whole world market catches a cold.

Factor 2 — World harvests down

The direct consequence: world production under pressure. However naturally the olive tree alternates "on" and "off" years, the string of bad seasons prevented any rebound.

Chain result:

1. Low harvests → less oil available.
2. Carryover stocks exhausted to fill the gap.
3. No more cushion to absorb the next season.

Without buffer stock, each new piece of bad weather news feeds through immediately to prices. That is what turned a harvest drop into a surge. The detail of the price variables is covered in what makes the price of bulk olive oil vary.

Factor 3 — Demand that did not buckle

Against this shrunken supply, demand stayed solid. Olive oil benefits from a strong health image (Mediterranean diet, polyphenols), expanding markets (North America, Asia, Gulf) and a loyal clientele that does not easily abandon the product despite the rise.

This rigidity of demand has a mechanical effect: when consumers keep buying despite high prices, nothing slows the rise. The market then rebalances only through the return of supply, not the collapse of demand.

Factor 4 — Costs, speculation and chain effects

Other elements amplified the movement:

• Rising production costs (energy, labour, inputs, transport).
• Fraud and diversion favoured by scarcity and high prices (oil becomes a target).
• Logistical tensions and exchange-rate volatility on certain import routes.

These factors are not the primary cause — the climate is — but they sustained and propagated the surge along the chain, from mill to shelf.

Where do we stand today? (dated )

As harvests recover, an easing of prices has begun: the return of more normal seasons gradually rebuilds supply and stocks. But prices remain, in mid-2026, above their pre-crisis levels, while carryover stocks rebuild.

Two points to watch for a buyer:

• The easing is not a return to before: do not count on the prices of five years ago.
• The market remains sensitive to the weather of each new season. A single drought is enough to relaunch the strain.

To follow developments in real time rather than on ageing figures, rely on our price observatory and on 2026 world price trends.

Why Tunisia comes out ahead

In this landscape, Tunisia holds a favourable position. Its record 2025-2026 season gives it volume when other basins fall short. Combined with a competitive origin cost — around ~€3.80/kg FOB in extra virgin — it stands out as the origin with the best quality-to-price ratio, where Italy remains markedly more expensive. The full figures are in the Tunisian 2025-2026 olive season.

What a buyer should take away

Do not confuse a cyclical surge with a structural price. A "low" price today is only low compared with the peak; it remains high compared with the long history. The right strategy: secure your volumes at the right point in the season, compare origins at equal quality, and do not wait for a return to old rates that may never come. The right buying timing often does more for your cost than the negotiation itself.

FAQ

Why has olive oil become so expensive?

Because global supply collapsed (droughts and heatwaves reducing harvests, notably in Spain) while demand stayed strong. This imbalance emptied carryover stocks and pushed prices to records. It is a surge of climatic origin, amplified by rising costs.

Will prices fall in 2026?

An easing has begun with the recovery of harvests, but prices remain, in mid-2026, above their pre-crisis levels, while stocks rebuild. The market stays sensitive to the weather: a new drought could relaunch the strain. Follow a dated price observatory rather than fixed figures. (To be verified.)

Is climate really the main cause?

Yes, it is the trigger. The olive tree suffers from water stress and heatwaves at flowering; several bad seasons in a row, without a sufficient rebound year, sent world production plunging. Rising costs, fraud and logistics amplified the movement, without being the primary cause.

Why does a harvest drop have such a strong effect on price?

Because there was no more buffer stock. The low harvests exhausted carryover stocks, so each new piece of bad weather news fed through immediately to prices. Without a safety cushion, a strained agricultural market reacts very fast to the slightest shortage.

Is Tunisia cheaper than Spain or Italy?

At origin, Tunisia remains very competitive, around ~€3.80/kg FOB in extra virgin, against higher levels in Spain and markedly more expensive ones in Italy. Its record 2025-2026 season also gives it available volume, making it an origin with a good quality-to-price ratio.

Should you wait to buy?

Waiting for a return to pre-crisis prices is risky: that level may never come back. Better to secure your volumes at the right point in the season and compare origins at equal quality. Buying timing, more than negotiation, often determines your final cost.

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