(JUBA) – South Sudan’s fragile economic base is once again at risk after Sudanese authorities warned that operations at the Heglig oil fields may be suspended following militia attacks.
The Heglig fields, located along the Sudan-South Sudan border, are vital to the pipeline network that transports nearly all of South Sudan’s crude oil to Port Sudan on the Red Sea. Any disruption would have an immediate impact on Juba’s revenues, as oil accounts for more than 90 per cent of government income.
The renewed danger to oil flows comes as South Sudan faces its own political turbulence. Vice President Riek Machar is under new charges of murder, which his allies have dismissed as politically motivated. This has further strained relations with President Salva Kiir’s faction, deepening divisions ahead of elections that have already been delayed several times. The rivalry has slowed reforms and weakened oversight in the oil sector, leaving revenues exposed to mismanagement and external shocks.
According to a United Nations commissioned report, South Sudan’s leadership has been accused of systematically diverting oil revenues away from public spending, a problem compounded by insecurity in Sudan. Oil that reaches Port Sudan is already vulnerable to political disputes in Khartoum, where rival armed groups have repeatedly targeted key installations, including the Heglig fields.
Oil Sector Risks for South Sudan
| Risk Factor | Potential Impact on South Sudan |
|---|---|
| Militia attacks in Heglig | Suspension of crude flows |
| Pipeline disruption in Sudan | Reduced export capacity |
| Political rivalry in Juba | Weak oil sector oversight |
| Corruption and diversion | Loss of revenue for public services |
At present, South Sudan’s oil exports average around 150,000 barrels per day. With prices fluctuating at about $80 per barrel, this gives Juba a potential daily income of $12 million (around 85 billion South Sudanese Pounds, SSP). A suspension of Heglig operations could cut this figure sharply, leaving the government struggling to fund salaries and services.
The fragile oil corridor has been disrupted before. In December 2024, border fighting led to a near shutdown of exports, which triggered inflation and a sharp currency fall in Juba. A similar scenario in 2025 would likely undermine business confidence further, particularly as South Sudan already faces high inflation, weak reserves, and reduced investor interest.
Political uncertainty in South Sudan adds to the risk. The charges against Vice President Machar have escalated tensions within the coalition government, raising fears of renewed instability at a time when the economy depends heavily on external stability in Sudan.
For businesses, the risk is twofold: on one hand, oil export revenue underpins government spending that drives local demand. On the other, any disruption to exports reduces foreign exchange inflows, weakening the South Sudanese Pound. The exchange rate currently stands at about 7,100 SSP to $1, and further pressure could make imports more expensive for consumers and companies.
Impact of Oil Disruption on Currency and Trade
| Factor | Current Position | Risk with Oil Disruption |
|---|---|---|
| Exchange Rate | 7,100 SSP per $1 | Possible further depreciation |
| Government Revenue | $12m daily (85bn SSP) | Sharp decline in case of shutdown |
| Imports | Already costly | Higher due to weak currency |
The immediate outlook for South Sudan’s economy depends on the ability of Sudan to secure the Heglig fields and the pipeline route, as well as on Juba’s political leaders resolving internal disputes. Without stability on both sides of the border, South Sudan’s reliance on oil exports will remain a major vulnerability, limiting prospects for sustainable growth.