SUDAN’S WAR SHUTS DOWN SOUTH SUDAN’S OIL LIFELINE — AND THE TRADE FALLOUT IS SPREADING
In May 2025, South Sudan’s economy was suddenly brought to a halt after fighting in neighbouring Sudan disabled a key oil pipeline. The 1,600-kilometre pipeline — which runs from South Sudan’s oil fields to Port Sudan on the Red Sea — was knocked offline when armed conflict disrupted the power supply to pumping stations. The fighting, part of the ongoing war between Sudan’s army and the paramilitary Rapid Support Forces (RSF), caused extensive infrastructure damage and temporarily cut off South Sudan’s only viable export route.
By 10 June, following emergency repairs, the pipeline was restored and crude began flowing again. But the damage was done. During the shutdown, South Sudan lost access to nearly all of its foreign revenue — a critical issue for a country where oil accounts for over 90% of government income.
WHY THIS MATTERS
South Sudan’s reliance on oil isn’t just deep — it’s near total. In 2024, oil made up an estimated 96% of all exports and most public revenues. That money funds everything from civil servant salaries and medicine imports to infrastructure projects and peacekeeping operations. When the pipeline was shut, the economy ground to a halt. The South Sudanese pound plummeted, inflation soared, and public sector salaries were suspended.
This wasn’t a gradual slide. It was an abrupt economic vacuum — a complete removal of hard currency from the system. The episode illustrates just how exposed the country remains to regional instability, particularly from Sudan, which controls the export infrastructure.
OIL PRODUCTION UNDER PRESSURE
Even before the pipeline was disrupted, South Sudan’s oil output had been in slow decline. From around 170,000 barrels per day in 2020, production had already fallen to roughly 130,000 barrels per day by the end of 2024, due to ageing infrastructure and declining investment. The shutdown in May 2025 pushed production even lower, with officials confirming flows dropped to about 90,000 barrels per day during the crisis.
This production trajectory is shown in the chart below:
REGIONAL AND COMMERCIAL FALLOUT
Though the crisis centred on South Sudan, its effects extended across the Horn of Africa. With Port Sudan threatened by further RSF incursions, neighbouring countries that rely on Sudanese infrastructure — including Chad and the Central African Republic — faced fresh uncertainty about trade access.
Meanwhile, the Sudanese government itself has used the pipeline shutdown as political leverage. In June, Sudan’s military warned that transit of South Sudanese oil could be halted again unless terms were renegotiated. This raised concerns that economic infrastructure may be increasingly politicised or even militarised as Sudan’s war drags on.
For international businesses, particularly in oil, construction, logistics, and humanitarian operations, the message is clear: critical infrastructure remains hostage to conflict zones — and cannot be taken for granted.
WHAT BUSINESSES AND INVESTORS ARE DOING
In response, some foreign investors have begun exploring alternative routing options. Talks have restarted around long-delayed pipeline projects linking South Sudan to Kenya’s port of Lamu or to Djibouti via Ethiopia. However, these routes are years from completion and require capital, political will, and security guarantees.
In the meantime, companies operating in Juba and the oil-producing regions of Unity and Upper Nile have introduced new contingency plans. Many are now routing staff and supplies via Uganda rather than Sudan, and some are switching to air freight for high-priority goods.
Investors in infrastructure and energy are watching closely for signs of Chinese and Indian re-engagement, as both countries have expressed interest in financing new development blocks — on the condition that the security situation improves.
WHAT TO WATCH NEXT
The pipeline may be flowing again, but there are still serious risks on the horizon. The SAF-RSF conflict continues to escalate. If key towns or infrastructure fall into RSF control, the pipeline could again be disrupted. Additionally, with peace talks faltering and Sudan’s economy collapsing, there’s little guarantee that oil transit will remain protected.
For importers, exporters, and investors operating in or around South Sudan, several steps are increasingly necessary: building cash flow buffers to survive 30–60 day disruptions, reviewing logistics routing plans, tightening force majeure clauses, and preparing for currency volatility.
BOTTOM LINE
South Sudan’s pipeline shutdown was not just an infrastructure problem — it was a national fiscal crisis, triggered by a foreign war. The episode is a stark reminder that in frontier markets, the link between politics, security, and trade is direct and immediate. For any business operating across East Africa, resilience planning can no longer be optional. It must be baked into strategy.