Rising global oil and butane gas prices, amplified by ongoing Middle East tensions, are once again forcing Morocco to confront a question it has long sidestepped: should the government and private operators use financial hedging instruments to shield consumers and public finances from commodity price volatility?
Hedging — essentially a financial insurance mechanism — allows states and companies to lock in future purchase prices through instruments such as futures contracts and options, insulating themselves from unpredictable market swings. Morocco’s last significant attempt dates to 2013, when the Benkirane government secured coverage for 1.6 million tons of crude oil at a ceiling price of 120 dirhams per barrel, backed by both Moroccan and international banks. The outcome was costly: prices subsequently fell, and the state paid nearly $70 million for protection it ultimately did not need.
The landscape has since changed fundamentally. Fuel market liberalization has transferred import responsibility to private operators, largely removing public finances from direct exposure to crude price fluctuations. Higher pump prices can even boost government revenues through VAT and fuel tax receipts. Butane gas, however, remains state-subsidized through the Caisse de Compensation, and its price has risen from $485 to $545 per tonne since December — making the subsidy burden an active fiscal concern.
Private sector hedging practice remains uneven. Houcine El Yamani of the National Front for Samir Refinery noted that fuel importers typically operate without forward coverage, preferring to run minimal strategic reserves — a practice that exposes supply chains to disruption risk. By contrast, flour millers routinely hedge against grain price swings, ONEE covers its LNG and coal exposure, and airlines including Royal Air Maroc manage fuel costs through currency and commodity hedging strategies.
With Morocco holding national fuel reserves estimated at just 617,000 tons — barely 18 days of consumption — and the Strait of Hormuz carrying roughly 20% of global oil supply through an increasingly tense region, the case for more systematic hedging deserves serious reconsideration.
