The shortage has been pushing up wholesale prices for months. Premium-quality extra virgin olive oil rose to $4,282 a tonne last month, the highest since 2008, according to the International Monetary Fund.
The civil war in Syria has also hit production there. Most Syrian output is consumed domestically, but some argue that this is providing further psychological support for prices.
Vito Martielli, analyst at Rabobank, said higher costs might further hit consumption in southern Europe, traditionally the largest market. The economic crisis in 2008 hit olive oil demand in Spain, Italy and Greece, and appetite has been waning as shoppers have turned to cheaper substitutes.
Favorable weather in most parts of the world this year has meant that harvests of oilseed crops have been plentiful and prices have been falling.
The price of soya oil has fallen 20 per cent so far this year; palm oil has declined 17 per cent, and rapeseed oil is down 5 per cent. "We are in a situation where there are cheaper alternatives in Europe," Mr Martielli said.
The IOC expects olive oil consumption in 2015 to fall 7 per cent to 2.8 million tonnes. Italy, the largest consumer of olive oil, is forecast to see a fall of 16 per cent to 520,000 tonnes, Spain is expected to see a 3 per cent decline to 515,000 tonnes, while Greece's consumption is expected to fall 6 per cent to 160,000 tonnes.
Compared with the pre-crisis levels in 2007, Italy's consumption is down almost 30 per cent, Spain's 4.5 per cent and Greece's 41 per cent.
The IOC, which publishes benchmark supply and demand estimates, forecast that Spanish olive oil production would more than halve next year to 825,700 tonnes. Production in Italy is expected to fall about a third to 302,500 tonnes, the lowest level since 1991.
The shortages would be only partially compensated for by bumper crops in Greece, the number three producer, and Tunisia.