The Moroccan Ministry of Energy Transition and Sustainable Development reported today, Thursday, that the kingdom possesses stocks of diesel that are sufficient for 51 days and gasoline stocks that can last for 55 days. These statements come at a time when the country is experiencing heightened pressures due to the Israeli-American war on Iran, alongside a significant increase in global energy costs.
Morocco, which heavily relies on importing its energy needs, faces additional challenges after the closure of its only refinery in 2015, which has increased its dependency on imports. Oil prices have surged to unprecedented levels, reaching record highs last March, negatively impacting the Moroccan economy.
Details of the Situation
In the Moroccan market, diesel and gasoline prices have increased by approximately 30% since the onset of the war on February 28. The Ministry of Energy Transition confirmed that diversifying supply sources, particularly from Europe and the United States, has helped mitigate the economic impact of the crisis. It also noted that coal supplies are secured until the end of June, with plans to issue new tenders in mid-April to cover the needs for the third quarter of the year.
Furthermore, the ministry clarified that natural gas supplies are secured until the end of June, despite an 11% decrease in gas consumption in the first quarter of the year, thanks to increased electricity generation from hydropower following the filling of dams with rainwater.
Background & Context
Morocco relies on importing most of its gas through liquefied natural gas terminals in Spain, using a pipeline that was previously utilized to transport Algerian gas to Spain via Moroccan territory. Data from the National Electricity Regulatory Authority in the kingdom indicates that coal still constitutes about 60% of electricity production in Morocco, while natural gas accounts for only 10%, and renewable energy from wind and solar represents 25%, making the country sensitive to any rise in coal prices or disruptions in supply chains.
In an effort to contain the impact of rising costs, the Rabat government has reinstated targeted support for workers in the transportation sector, including taxis, buses, and trucks, despite having eliminated diesel subsidies in 2014. However, this support remains limited in effect, as the import, storage, and distribution of petroleum products in Morocco are managed by private companies and ultimately subject to market forces.
Impact & Consequences
These pressures complicate the financial calculations of the Moroccan government, which has set the 2026 budget based on a price of $60 per barrel, while Brent crude prices reached around $108 per barrel today, according to Reuters reports. The Moroccan Finance Minister has confirmed that the situation in the Middle East will lead to rising inflation, without providing details on the impact on the fiscal deficit.
Last month, the Governor of the Moroccan Central Bank, Abdellatif Jouahri, indicated that the country might resort to a flexible credit line from the International Monetary Fund worth $4.5 billion if oil prices exceed $120 per barrel.
Regional Significance
These developments in Morocco are part of a larger picture concerning energy security in the region, where other countries are experiencing similar effects due to political unrest and conflicts. Rising energy prices could exacerbate economic crises in many Arab countries, necessitating new strategies to address these challenges.
In conclusion, these circumstances highlight the importance of enhancing energy security in Morocco, developing renewable energy sources, and reducing reliance on imports to ensure the stability of the national economy amid changing global conditions.