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The Netherlands took the lead in the 72nd minute through Cody Gakpo, but Morocco equalised deep into stoppage time when Issa Diop scored in the first minute of added time (90+1).
With the score remaining level after extra time, the match was decided by a penalty shootout. Both teams converted and missed spot-kicks before Ismael Saibari scored the decisive penalty to seal a 3-2 shootout victory and send Morocco through to the Round of 16.
Morocco will face Canada in the next round after the Canadians booked their place by defeating South Africa.