It’s over — the olive oil crisis that gripped my kitchen is fading away. After two consecutive years of crop failures, Spanish olive farmers are now harvesting enough fruit to guarantee good supply in 2025. Wholesale prices have fallen about 55% from their record high set in February; retail prices will soon follow.Yet, I don’t anticipate a return to the low prices of the last 20 years for two reasons — one is temporary, the other is structural. Few are paying enough attention to either.First, the good news.The olive harvest is underway in the Andalusia region of Spain, which accounts for about one-third of global production. Typically, harvesting volumes peak there just before Christmas, and by now we have a very good idea of both quantity and quality. 116494227Thanks to a better crop, Andalusia is likely to produce about 1 million metric tons of olive oil in the 2024-2025 season, up 77% from the previous year. Add other areas of Spain, plus good crops too in Greece, Portugal, Tunisia and, above all, Turkey, and global output is expected to recover to about 3.4 million tons, up from less than 2.6 million tons in 2023-2024. Among major producers, only Italy is yet to recover as a pathogen is killing the country’s olive trees. 116494260The harvest won’t finish until early March, but the market isn’t waiting. As soon as it became clear that the crop was much larger than in the previous two years, everyone rushed to sell.The cost of top-quality Spanish extra virgin olive oil in the wholesale market has fallen to about $4,250 per ton, down by more than half from an all-time high of more than $10,000 per ton set in February. On the supermarket shelves, a liter of olive oil could soon drop from more than €10 per liter to about €5 per liter.The price drop is a big relief for southern Europeans, for whom olive oil is a way of life — it imbues food and social customs developed for millennia on the shores of the Mediterranean Sea. For many families in the region, its higher price came to symbolize the struggle against rampant inflation. Every week at the supermarket, I grumbled at the cost, and hoped for a better day. 116494298For Spaniards, this was a real crisis. We generously coat our food in olive oil. And I mean properly coating it: The average Spaniard consumes about 14 liters in a normal year. Multiply that for a family of four, and a household in Spain would have spent more than €450 ($471) in a year at the average retail price of 2023-2024. (The Greeks are the champions of olive oil, consuming more than 20 liters per person a year. The Italians come just after the Spaniards, consuming about 11 liters. The Brits and the Americans sprinkle about one liter per capita annually.)Thus, the drop in wholesale prices is a huge respite — the kind of news story in southern Europe that makes it into the public television nightly news bulletins. Yet I worry it looks a bit overdone. And here comes the bad news I talked about earlier.First, the temporary factors. After two years of bad crops, farming cooperatives in Spain were cash strapped, so they have sold their crop as early as they could, in turn crashing the market. But the sales will dry up later, putting a floor on prices. Moreover, global olive oil stocks have been depleted, and it will take significantly more than just one good harvest to replenish the inventories. In Spain, inventories ended the 2023-2024 season at about a quarter of the typical level. Globally, olive oil stocks last season dropped to a 57-year low, settling at about half the average of the last two decades.It would take several bountiful years before inventories are replenished enough to let prices fall back to pre-crisis levels.Second, the structural factors. Olive oil is a victim of its own success. With the Mediterranean diet gaining popularity around the world, olive oil consumption has doubled over the last 30 years. And the trend looks set to continue, despite the impact of high prices. 116494336Beloved as it is in southern Europe, olive oil accounts for a tiny fraction of global edible-oil consumption. In 2020, it represented less than 2% of the global market, on par with cottonseed and coconut oil. Palm oil and soybean oil together account for 65%; sunflower and rapeseed oil represent another 24% combined. Thus, olive oil has room to win market share easily. The problem is that it can’t: Supply is limited, and any increase in popularity will force prices much higher.How popular is olive oil becoming? A lot, the statistics say. In the US, demand has surged more than 300% over the last three decades. Or consider France, the country of beurre, where demand has increased 400% since 1990 and today its consumption matches that of Greece. The UK has witnessed a spectacular growth — probably helped by the fact that I relocated from Madrid to London a couple of decades ago. Since 1990, British olive oil consumption has increased about 1,100%. It’s a similar story in the emerging markets, where olive oil is making great inroads in nations like Brazil. Demand in those new consumption centers appears less sensitive to prices than in the core regions of the Mediterranean, too. With low inventories and pent-up demand, olive oil prices can only fall so far. The crisis is over, but the years of plenty appear far, far away. Perhaps it’s not at bad result: For the first time in a long time, olive oil farmers, long the weakest link in the supply chain, are set to do well. If you enjoy olive oil, that’s a cause for celebration.