My Personal Oil Price Shock — Olive Oil, That Is

Oil crises have occupied plenty of time during my career covering commodities. But today I’m discussing another oil crisis afflicting just about every household in southern Europe: olive oil.

Let's start here: the price of olive oil has surged to an all-time high, double a year ago. A metric ton now costs more than 10 times a metric ton of crude oil. In 2019, before the pandemic, the ratio was less than five times.

For me, the price shock is personal. Born and raised in Spain, I love the stuff; I consume too many liters a year. Back home for the summer break, the stratospheric cost of the golden liquid is a constant topic of dinner table conversation, best summarized by my own mother: “It’s out of control.” With myself and my sister visiting for holiday, I fear my father would put the kitchen’s oil dispenser under lock and key.

How bad is it? Last week, the benchmark wholesale price of extra virgin olive oil surged to an all-time high of $8,500 per metric ton, about 125% higher than the 2000-2020 average. The previous record was set in 1996 at a little over $6,200 a ton.

In southern Europe and the Levant, olive oil is as much culture as food, a way of life around shared customs on the shores of the Mediterranean Sea. For many families in the region, its price has come to symbolize the struggle against rampant inflation.

Unfortunately for me, I’m my family’s in-house commodity expert, required — and that’s the right word — to provide supply, demand and price forecasts over the kitchen table. A lot is a stake, as my father would rush into the supermarket and stockpile on my recommendation. A blown call would certainly be reflected in my next Christmas present. Right now, thankfully, my standing is high: A few months ago, I called the bull market just right. But what comes next is what really worries me.

The supply outlook is “critical,” says Oil World, the industry bible that has tracked the ups and downs of the market for the last 65 years. “Demand rationing is inevitable.”

At my hometown’s local supermarket, the cashier shakes his head in disbelief. “We’ve to change the prices every week,” he says — “and it’s always higher.” The most popular brand in Spain retails now for 9.99 euros ($11), more than double a year ago and about three times what many would call normal. The 10 euros-per-liter mark is a psychological price barrier for my compatriots, akin to US drivers facing $5 per gallon gasoline prices last year.

For Spaniards, this is a real crisis. We generously coat our food in olive oil. And I mean properly coating it; anyone here would roll their eyes at those American-style spray bottles. The average Spaniard consumes about eight liters per year; Italians, Greeks and Portuguese do as much, if not even more. Multiply that for a family of four, and a household in Spain would spend more than 300 euros in a year, at current prices.