RABAT (Reuters) - Saudi Arabia has granted Morocco, its staunchest ally in the Maghreb, $500 million to help it weather the shock of oil price increases, the government in Rabat said on Tuesday.

Morocco's King Mohammed received the Saudi ambassador to Rabat Mohammed El Besheg on Monday to thank Saudi King Abdullah for the grant.

"This significant gesture reflected the effective and permanent solidarity between the two kingdoms," said King Mohammed, quoted by an official statement.

Morocco saw the value of its oil imports double to 8.13 billion Moroccan dirhams in the first quarter of this year versus the same period last year, official figures show.

It is also having to import most of its food needs this year following a drought that slashed its cereals harvest to 2.0 million tonnes in 2007 from 9.3 million tonnes in the previous year.

Morocco was the only state in the region to deploy troops in the 1990s to Saudi Arabia to help it defend its territory against invasion threats by Iraq, which was then ruled by Saddam Hussein.

Most influential Saudi princes own palaces in Morocco where they often spent their holidays.

The Rabat government's announcement came on the day that world oil prices reached a record high above $120 a barrel in an advance that has seen them double over the past 12 months.