• S&P keeps Morocco at BBB-, but the Hormuz closure blocks vital sulfur for OCP fertilizer. Budget risks rise as oil hits $120
• OCP revenue hit $11.4B in 2025, but a war-driven "sulfur trap" stalls production of the complex fertilizers global farmers need
• With China's export ban and Gulf routes cut, OCP's Atlantic ports are free, but unknown sulfur stocks limit future output
  

Morocco received a vote of confidence from one of Wall Street’s leading credit rating agencies last week. S&P Global Ratings maintained the country’s sovereign rating at BBB- with a stable outlook on March 27, a level that keeps Morocco among the few African economies with investment-grade status and relatively low borrowing risk on international markets. However, the same report also flagged a concern that is now intensifying: Morocco’s main export revenue source is caught in a supply constraint that a Middle East conflict is turning into a potential crisis.

That source of revenue is OCP Group, the state-owned phosphate producer in which the Moroccan government holds a 95% stake. The company generated $11.4 billion in revenue in 2025, up 17% year-on-year, according to its fourth-quarter results. OCP controls about 70% of global phosphate rock reserves and is the world’s largest exporter of fertilizers used by farmers from Brazil to India. Phosphates and their derivatives accounted for 21.3% of Morocco’s total exports last year, according to S&P, exceeding tourism revenues, automotive exports, and any other single category.

The issue is that producing fertilizer from phosphate rock requires sulfur, a chemical that Morocco scarcely produces domestically. OCP imports around 3.7 million metric tons of sulfur each year, almost entirely from the Persian Gulf, according to a March 2026 report by the North Dakota State University Agricultural Trade Monitor. This effectively means that the most critical input for Morocco’s fertilizer industry depends on supplies from a region now affected by conflict.

Blocked strategic route

On March 4, Iran closed the Strait of Hormuz, the narrow waterway linking the Gulf to the open ocean, following military strikes by US and Israeli forces on Iranian territory on February 28. The strait handles nearly half of global sulfur trade and about a quarter of ammonia flows, according to commodity pricing firm Argus Media. Tankers carrying sulfur to OCP’s processing sites in Jorf Lasfar and Safi on Morocco’s Atlantic coast are no longer able to reach their destination. “The shutdown has halted tanker movements and disrupted deliveries of both finished fertilizers and key raw materials, triggering a cascading effect on phosphatic fertilizer production,” the NDSU report said.

The situation places OCP in a paradox. On one hand, the conflict has disrupted its main Gulf competitors. Saudi Arabia’s Ma'aden, the world’s second-largest phosphate producer, is also unable to ship. Buyers in India, which signed supply agreements with OCP in early 2025 covering 2.5 million tonnes of fertilizer, or about 22% of its import needs, are now seeking additional Moroccan volumes, according to data from Global Sovereign Advisory. OCP’s Atlantic ports remain fully operational and are located far from the conflict zone. The company shipped 90,000 tonnes of fertilizer to Latin America in late March alone, according to La Vérité.

On the other hand, OCP cannot produce complex fertilizers without the sulfur it is no longer receiving. Phosphate rock alone cannot be converted into DAP or MAP, which account for most of the company’s revenues, without being processed with sulfuric acid derived from imported sulfur. The more advanced the fertilizer blend, the higher the sulfur requirement. Each additional week of disruption at the Strait of Hormuz further constrains OCP’s production capacity.

The impact on prices is already visible at the global level. Benchmark fertilizer prices have risen from around $500 to more than $650 per tonne since the closure, according to Argus Media data cited by Les Eco. China’s decision to suspend its phosphate exports until at least August 2026 has added further strain on global supply, Morocco’s finance ministry said in its March 2026 economic bulletin.

For Morocco’s public finances, the risk is tangible. OCP pays dividends to the state, making its production performance both a fiscal and industrial issue. The 2026 budget is based on an oil price assumption of $65 per barrel, while Brent crude is currently trading above $120. S&P warned that a significant deterioration in Morocco’s external position or budget performance compared with current forecasts could lead to a downgrade of the BBB- rating.

OCP is moving to reduce its exposure. The group has committed $13 billion to develop domestic green ammonia production, with a first plant in Tarfaya on Morocco’s southern Atlantic coast expected to start operations by the end of 2026, according to Les Eco. While this project would lower reliance on imported ammonia from the Gulf, it does not address the sulfur constraint. OCP has not disclosed inventory levels at its industrial sites, leaving uncertainty over whether existing reserves can sustain full production in the event of a prolonged disruption.

S&P’s next review of Morocco’s BBB- rating will indicate whether the agency still considers the country’s economic buffers sufficient to offset rising risks. With legislative elections scheduled for September 23, the government has limited room to absorb any fiscal shock in the coming months.

Idriss Linge