South Sudan Faces Economic and Humanitarian Crisis Amid Oil Export Disruptions

South Sudan, which gained independence from Sudan in 2011, is grappling with severe economic and humanitarian challenges due to disruptions in its oil exports. The country produces 149,000 barrels of oil per day and relies on Sudan's pipelines to export its oil, paying $23 per barrel in transit fees.

A pipeline rupture in Sudan has blocked the bulk of South Sudan's oil from export, requiring lengthy repairs. This disruption has led to a dramatic drop in oil exports, which has exacerbated the country's fragile finances. The International Crisis Group (ICG) warns that the consequences will be dire, including the government running out of money and a plunge in the national currency's value.

Why this matters: The economic and humanitarian crisis in South Sudan has far-reaching implications for regional stability and global oil markets. A collapse of the South Sudanese economy could lead to a humanitarian disaster, with potential spillover effects on neighboring countries.

The economic crisis is expected to worsen the humanitarian situation in South Sudan. According to the ICG, chronic food shortages will worsen, leading to renewed instability and fighting. Over 7 million people, out of South Sudan's 12 million-strong population, are already acutely hungry and rely largely on imported food. The slide of the South Sudanese pound is a major concern, as it will further exacerbate the humanitarian crisis.

The disruption in oil exports has also impacted South Sudan's international negotiations. The pipeline rupture has disrupted talks for a multi-billion-dollar loan from the United Arab Emirates (UAE). The loan, if secured, would be South Sudan's largest-ever oil-backed loan, but it would likely tie up most of the country's revenues for many years, depending on oil prices.

South Sudan is also under pressure to implement the 2018 peace deal that ended its civil war and to prepare for elections. The country fought a civil war from 2013 to 2018, which ended with a power-sharing agreement between President Salva Kiir and Vice President Riek Machar. However, the peace agreement has yet to be completely implemented, contributing to ongoing conflict and bloodshed in many parts of the country due to ethnic and political divisions.

As South Sudan prepares for elections in December 2024, the country's leaders face numerous challenges, including a weak economy, rampant corruption, catastrophic floods, and deadly clashes in much of the countryside. The damaged pipeline, which broke down in February 2024 and is expected to be out of action for months, has further exacerbated the economic crisis, with the economy plummeting.

The economic and humanitarian crisis in South Sudan is a stark reminder of the country's reliance on oil exports and the fragile nature of its economy. With the pipeline disruption and the ongoing conflict in neighboring Sudan, South Sudan faces an uncertain future as it navigates these complex challenges, with the government and rebels signing a peace deal in Kenya.

Key Takeaways

• South Sudan's oil exports blocked due to pipeline rupture in Sudan.
• Country's economy fragile, reliant on oil exports, and facing humanitarian crisis.
• 7 million people acutely hungry, relying on imported food, and situation to worsen.
• Disruption impacts international negotiations, including $13 billion loan from UAE.
• Country faces uncertain future, with elections in 2024 and ongoing conflict challenges.