U.S. officials say the most recent fighting between Sudan and South Sudan damaged some of the oil infrastructure on which both countries' economies depend. African Union is working to implement terms of a cease-fire.
During South Sudan's brief occupation of the town of Heglig, there was damage to an oil collection manifold joining pipelines from adjacent oil fields. The Harvard Humanitarian Initiative says satellite imagery can not determine whether the damage came from aerial bombardment or ground action.
Either way, it is another setback for Sudanese oil at a time when both countries are counting on that revenue.
"That's not a very good situation at all," said Princeton Lyman, the U.S. special envoy for Sudan and South Sudan. "It will take some time to get that back on track. Both countries are suffering from the crisis in the oil sector. South Sudan lost 98 percent of its budget revenue. Sudan is facing serious foreign exchange shortages, which means they can't import as much food. They have fuel shortages."
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At independence last year, South Sudan took over most of Sudan's oil fields. But Juba shut down production in January after refusing to pay what it said were inflated fees imposed by Khartoum to use northern pipelines and ports.
One of the biggest investors in oil infrastructure on both sides of the border is China. Beijing is playing a more active diplomatic role in the dispute, hosting South Sudanese President Salva Kiir this week on a state visit.
Ambassador Lyman travels to China next week along with Secretary of State Hillary Clinton and Treasury Secretary Timothy Geithner.
"They have a stake in the oil sector," said Lyman. "But they have a larger stake in their relations between Sudan and South Sudan, and their relations with Africa in general. And I think they have increasingly recognized that if the political issues in Sudan and between Sudan and South Sudan are not resolved, neither the oil nor their other interests can be served."
In an interview Friday with VOA, Lyman said Juba and Khartoum need to formalize their cease-fire and act on an already agreed upon system to demilitarize and monitor their border. That, he says, should help resolve longstanding security concerns that Khartoum is backing raids into the south and southern forces are helping rebels in the Sudanese provinces of Southern Kordofan and Blue Nile.
"I think a political process there will decrease the problem of southern support to that conflict," added Lyman. "But the government of Sudan has to stop sending arms or other kinds of support to militia in South Sudan to try and weaken the government there."
Lyman says the strength of this week's African Union resolution to stop the fighting reflects the gravity of the conflict's threat to the region.
"They realize that a breakdown in peace in Sudan will spill over in every country - whether it is Uganda, whether it is Kenya, whether it is Ethiopia, whether it is Egypt," he said. "So all the countries in the region are affected if you have widespread conflict in Sudan."
The Arab League has joined the African Union and United Nations in a plan to open humanitarian corridors in Southern Kordofan and Blue Nile. Lyman says Khartoum is still studying the proposal and has concerns about how some parts of the plan will be carried out.
Aid officials say more than 140,000 people have already left Southern Kordofan and Blue Nile and are now refugees in South Sudan, Kenya and Ethiopia.