Sudan Clashes Could Threaten South Sudan Oil Exports

Landlocked South Sudan's oil could be at risk as clashes between the army and a paramilitary group in Sudan continued for a third day Monday, with the risk growing that this could turn into a full-blown civil war.

Sudan exclusively exports crude oil produced by landlocked South Sudan.

No indications have yet emerged that oil exports have been affected; however, previous uprisings in Sudan have taken barrels off the market.The Rapid Support Forces (RSF), a paramilitary group, took up arms against the Sudanese army in the capital Khartoum over the weekend, according to Al Jazeera. In a Facebook post on Monday morning, the army said that one group of RSF fighters had surrendered to the country's armed forces. At least 97 civilians have been killed in three days of clashes, according to the Central Committee of Sudanese Doctors, cited by Bloomberg.

For oil markets, the concern is that civil war could disrupt oil exports from South Sudan, which relies on Sudan proper to get its crude to the market via an oil terminal on the Red Sea. 

In 2021, tribal protests in eastern Sudan disrupted exports from South Sudan.  

Now, oil markets are closely watching the power struggle between military and paramilitary forces for signs that South Sudan's crude could be disrupted once again. This is a power sharing struggle between two powerful groups, both seeking control of strategic infrastructure, including the international airport and the public broadcaster. Because the Red Sea port, which handles South Sudan's crude oil, is a strategic infrastructure asset, oil market observers are keeping a cautious eye on developments. South Sudan has an estimated 3.5 billion barrels in oil deposits. South Sudan and Sudan export primarily Nile and Dar blends to markets in Asia from Port Sudan via the Bab el-Mandeb Strait. While most of the oil belongs to South Sudan, the two countries together exported some 132,000 bpd of crude oil in 2021.

By Michael Kern for Oilprice.com

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