Sudan sees new clashes between army and paramilitaries near Khartoum

The Sudanese army has launched a major offensive against the paramilitary Rapid Support Forces (RSF) in Omdurman, escalating the two-year conflict that has already resulted in tens of thousands of deaths and displaced 13 million people. The army aims to dislodge the RSF from its remaining positions, while the RSF has increased drone attacks on multiple cities, including Port Sudan, posing a growing threat to civilians and vital infrastructure. This escalation further fractures the country, with the army controlling central, eastern, and northern Sudan, and the RSF holding Darfur, parts of the south, and remaining strongholds in Omdurman.

Analysis

The conflict in Sudan has significantly escalated with the Sudanese army launching a "large-scale operation" against the paramilitary Rapid Support Forces (RSF) in Omdurman, a city adjacent to the capital, Khartoum. This offensive marks a critical development in a brutal war that has persisted for over two years, resulted in tens of thousands of fatalities, and displaced approximately 13 million people. The RSF, having reportedly lost control of Khartoum in March, has intensified drone attacks on multiple cities, including Port Sudan where the Sudanese government has relocated. These drone strikes are characterized by the U.N. expert on human rights in Sudan as a "major escalation," posing a growing threat to civilian lives and vital infrastructure, thereby worsening the already severe humanitarian crisis. The country is deeply fractured, with the army controlling central, eastern, and northern Sudan, while the RSF maintains its hold over nearly all of the western Darfur region, parts of the south, and its remaining strongholds in Omdurman. This situation underscores heightened geopolitical instability within an emerging market, carrying significant negative sentiment and a pessimistic tone regarding regional security and humanitarian outcomes.

Key Decisions for Investors

• Investors should exercise extreme caution regarding any financial exposure to Sudan and closely monitor geopolitical developments for potential contagion effects in the broader East African region.
• The escalating conflict, characterized by increased military operations and attacks on vital infrastructure, significantly elevates risks for any existing or contemplated investments in Sudan, necessitating thorough risk reassessment for emerging market portfolios.
• Despite signals indicating a low direct global market impact from this specific escalation, the severe humanitarian crisis and potential for protracted instability could disrupt specific commodity markets or supply chains with links to the region, warranting vigilance for investors with such exposures.