Via The New York Times, a report on the oil feud between South Sudan and Sudan which threatens stability in the region.  As the article notes:

Sudan and the breakaway nation of South Sudan have been locked in an exceedingly dangerous game of brinkmanship over billions of gallons of oil, seizing tankers, shutting down wells and imperiling the tenuous, American-backed peace that has held — just barely — between the two countries after decades of war.

Not for years have north-south relations been so poisonous, with a proxy war between the two nations fueling rebel groups and sometimes even flaring into direct Sudan-South Sudan clashes. The jagged, disputed frontier separating Sudan from its newly independent neighbor is now probably the most incendiary fault line in Africa, with two big armies that fought each other for generations massing on either side.

After emergency talks to prevent a full-fledged conflict, the two sides agreed to a vague nonaggression pact late on Friday, yielding to intense pressure from the African Union, the United States and China — a major oil partner for both sides — to move beyond the language and tactics of mutual destruction. But few analysts see any easy solutions to the heated push and pull over oil, and it is not clear how the nonaggression pact will be any different from previous security deals that have led nowhere. In May, the two sides agreed to demilitarize the contested border. But just days after that, Sudan began heavy bombardment along the border, occasionally dropping bombs in the south, while the South Sudanese rushed in weapons to rebel allies fighting just across the divide.

The border area has been a tinderbox for years because that is where most of the oil lies. Both sides desperately need oil to run their governments, feed their people and stamp out spreading rebellions. And theoretically, both sides need each other. The conundrum of the two Sudans is that 75 percent of the oil is in the south, just across the border, but the pipeline to export it runs through the north. Because of this, oil was once thought to be the glue that would hold the two nations together and prevent a conflict. Now, it seems, oil is becoming the fuse.

When South Sudan broke off from Sudan last year, after years of guerrilla struggle, its independence was heralded as the triumphal capstone ending one of Africa’s deadliest civil wars. But the question of how exactly the two sides would share oil profits loomed ominously over the separation, unresolved. Now that both nations are struggling to make it on their own, the issue has proved to be as prickly — and perilous — as many feared.

It was South Sudanese oil that drove Sudan’s economic boom of the past decade and made the repression by Sudan’s Islamist government (which is still heavily penalized by the United States) tolerable to many Sudanese. When South Sudan declared independence, it took oil worth billions of dollars with it, gutting Sudan’s economy and creating one of the deepest crises that President Omar Hassan al-Bashir has faced in his more than 20 years in power.

Mr. Bashir is now battling high inflation, a shrinking economy, student protests and several simultaneous rebellions — in Darfur, the Nuba Mountains and Blue Nile State — as well as genocide charges related to the massacres several years ago in Darfur, and stiff American sanctions.

At the same time, South Sudan, one of the world’s poorest countries, is facing a major food crisis and heavily armed ethnically based militias that have been sweeping parts of the countryside, killing hundreds and making a mockery of the South Sudanese security forces.

Stoking the tensions, Sudan and South Sudan have been covertly backing rebels in each other’s backyards, leading to border clashes and relentless aerial bombings. The more than 1,000-mile border between them is now effectively closed, with millions of pounds of emergency food and just about all trade held up in a two-way stranglehold.

Before the emergency accord on Friday, the situation was so precarious that many saw only violent outcomes. “I, personally, expect full-fledged war,” said Mariam al-Sadiq al-Mahdi, a leading opposition politician in Khartoum, Sudan’s capital. “This is like the previews before a film.”

In the fight over oil, the south has refused to turn over royalties for using Sudan’s pipelines. Sudan upped the ante in late December by seizing oil tankers filled with South Sudanese crude. Then the south took the drastic step of abruptly shutting down all of its oil wells, a measure that could quickly bring the economies of both north and south to their knees. South Sudanese officials have admitted they are using their oil to squeeze Khartoum to make concessions on all sorts of issues, including the disputed area of Abyei, insisting that oil production, about 350,000 barrels a day, will resume only after “all the deals are signed.”

The south has even threatened to sit on its oil for years while it builds an alternative pipeline through Kenya. But it is not clear how the new country will survive that long; oil provides about 98 percent of government revenue. And experts question whether the Kenya pipeline is even feasible. It would have to run uphill, requiring many expensive pumping stations, and most likely slice across Jonglei, a South Sudanese state that, with all its militias, is essentially a war zone.

In Khartoum, many people are still struggling to swallow the fact that the south is gone. Nobody likes the new map of Sudan. It used to be Africa’s biggest country. Now it looks as if it has been crudely amputated, left with the ragged edges of a raw wound.

“I still can’t get used to it,” said Nada Gerais, a sales manager in Khartoum. “It looks, looks …,” she struggled for the right word. “Weird.”

Mrs. Gerais is a perfect example of the nose dive Sudan’s economy has taken. She works in a meticulously polished Nissan dealership that used to sell 50 cars a month. Now, sometimes, it is down to five. She is thinking of switching to pharmaceuticals or food.

“People can stop buying cars, but they can’t stop eating,” she explained.

During the past decade, Sudan’s oil wealth helped build factories, roads and countless shish kebab joints, and it fueled plans for a futuristic minicity, a new airport and a reconfiguring of Khartoum to include a breezy promenade along the Nile.

But now high-rise buildings stand half-finished, and the plummeting value of the Sudanese pound has pushed electronics, books and even tomatoes out of reach for many.

Officials in Khartoum say the south owes them nearly $1 billion in pipeline fees, money needed to keep their economy from collapsing, and they recently sold some of the oil from the seized tankers before releasing them. South Sudan’s president, Salva Kiir, said the amount Khartoum wanted, $32 per barrel, was “exorbitant” and “completely out of international norms.”

Sabir M. Hassan, a Sudanese government negotiator, said that the north was willing to be flexible, but that the southerners were “too emotional” and still saw themselves as rebels.

“If you give them two choices, they’ll choose the one that hurts the north, not the one that helps the south,” Mr. Hassan said.

South Sudanese leaders say the same about Khartoum, which has blockaded roads leading south and recently held up humanitarian shipments, all to punish the south at the cost of millions of dollars in lost business.

Many political analysts wonder whether Mr. Bashir will be able to survive these crises. But it is hard to see who would replace him.

Sudan’s political opposition is deeply divided and run by white-bearded septuagenarians. The rebel movements do not have much support in Khartoum. Sudanese students started an Arab Spring-like movement last year, but they failed to gain any traction. The security forces were quick to arrest protesters and string them up from ceiling fans.

And Sudan has a resilience that transcends the turmoil. Every Friday, in a dusty ring on Khartoum’s outskirts, hundreds of Nuban men gather to watch traditional wrestling. Ethnic Nubans are leading the rebellion in the Nuba Mountains. But there is little evidence of that here.

“Things are fine,” said one elderly spectator.

Just as he was about to elaborate, a young wrestler scooped up his opponent and body-slammed him in the dirt.

“You see that!” the old man hollered. “My God, I love this.”