This Friday, in full grinding, the Spanish oil mills work in completely new conditions: about every eight kilos of oil must be in the tank. And it will continue till September 30, 2027.
For weeks now, we have been warning that the Ministry of Agriculture will be forced to activate the ‘red button’ for the first time in history which will release 12% of Spain’s oil production into a warehouse. And so it happened. The BOE just revealed that 188,000 tons are off the market.
Where does all this leave us?
Another perfect storm. Three things have come together this year: we’ve had a fairly large crop, lots of old oil, and ridiculously low prices (of course, that’s more than the costs involved in production). To give us an idea: the autonomous community’s capacity estimate for the 2026/2027 campaign is 1,602,596 tonnes. This is 23% more than the previous campaign and there were already 357,040 tonnes left over.
On October 2 we calculated that available oil exceeded the activation threshold by a minimum According to our calculations it was between 1% and 6%. BOE data confirms this: stocks and production totaled 1,959,636 tonnes, and the threshold, as far as we know, was around 1,844,000. So we are talking about 6.3%.
What happens now? Controlling the mechanism only tells us when it is activated, not with what force and effect. This is what defines the BOE and, taking into account what we calculated in the best two campaigns of the last six, “what’s left” is about 12%.
That is the underlying problem. Because the idea is good: removing all the oil will keep prices down and allow many producers to offset the costs. In fact, agricultural bodies had requested to activate it from October 20. However, it is not that simple.
About 600 million euros will be kept in a drawer and the oil mills will keep them inside They are the only ones who have the obligation (without compensation or any exemption). Therefore, the packaging industry rejects a measure that, according to EFE, “unbalances the market.” Asoliva, Anierac, Infaoliva and Almazaras Federadas have already appealed last year’s order, which was never implemented, and have already announced they will appeal the order.
Will we notice it? The truth is that we do not know. As this is the first time such a measure has been implemented, it is unclear what impact it will have on supermarket shelves. The idea is that what we save today “buffers” short harvests in the future. But, as I say, nobody really knows. We enter uncharted territory.
And that, talking about something as central as oil, is saying a lot.
Picture | Kamil Sumotalsky
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