Morocco faces renewed inflation risk as oil shock raises import costs, report says

Morocco faces a renewed risk of imported inflation as rising oil prices linked to Middle East tensions threaten to push inflation above current low levels and strain public finances, according to a note by BMCE Capital Global Research.

Inflation had remained contained at below 1 percent in early 2026, allowing Bank Al-Maghrib to hold its benchmark interest rate at 2.25 percent, with projections of around 0.8 percent for the year under stable conditions.

The report warns that a prolonged conflict involving the United States, Israel and Iran could disrupt energy flows through the Strait of Hormuz, triggering a sustained rise in oil prices and a return of imported inflation.

Oil prices have already surged above $100 per barrel in recent weeks, reversing earlier assumptions used in Morocco’s 2026 budget, which was built on a reference price of around $65.

For an economy that imports more than 90 percent of its energy needs, the transmission is direct. Higher fuel costs feed into transport, industrial inputs and consumer prices, widening the trade deficit and increasing pressure on the state’s compensation system.

In a contained escalation, inflation could rise to around 2 percent in 2026, with limited impact on growth. In a prolonged conflict scenario, inflation could reach between 3 and 4 percent, with stronger effects on consumption, investment and fiscal balances.

The risk is not domestic overheating but external transmission. Imports represent more than half of Morocco’s GDP, making the economy structurally exposed to global price shocks, particularly in energy and food.

Bank Al-Maghrib is expected to maintain a cautious stance, with rate cuts no longer considered likely if inflationary pressures intensify.

Growth projections remain relatively strong, supported by agriculture and public investment, but the balance is tightening. Higher energy costs reduce household purchasing power and compress margins for energy-intensive sectors.