Why Is Olive Oil So Expensive?

Olive oil prices reached historic highs in 2023–2024 and have remained elevated into 2026. Understanding why requires looking at both structural and cyclical factors affecting the global supply chain.

Climate Is the Primary Driver

The single biggest factor behind recent olive oil price increases is reduced supply caused by climate-related harvest failures. Spain — which produces approximately 40–45% of the world's olive oil — experienced two consecutive seasons of dramatically below-average harvests in 2023/24 and 2024/25, driven by drought and heat stress during critical growing periods.

When the world's dominant supplier produces half its normal volume for two years in a row, prices inevitably spike.

Olive Oil Is Inherently Supply-Constrained

Unlike many agricultural commodities, you cannot rapidly increase olive oil supply in response to high prices. Olive trees take 5–10 years to reach full production, and the traditional varieties that produce the highest-quality oil are even slower. There is no short-term supply response to a price spike.

Production Costs Have Risen

Labour costs for traditional hand-harvesting have increased across all Mediterranean countries. Energy costs for olive mills (lagares) rose sharply after 2021. Fertiliser and irrigation costs have also increased. These structural cost increases set a higher floor for olive oil prices even in good harvest years.

Demand Has Grown Structurally

Global olive oil consumption has grown at 2–3% annually over the past decade, driven by health awareness (olive oil's association with the Mediterranean diet), culinary media, and growing middle classes in Asia and Latin America. This demand growth was absorbing supply comfortably before the harvest failures hit.

What This Means for Buyers

Prices are likely to remain above pre-2023 levels even as harvests recover, because the structural cost floor has risen. Buyers who locked in long-term supply contracts before 2023 are significantly insulated; those buying spot are paying the full market price.