This is the only region in the newest nation in the world that is still able to produce crude following over two months of violence.
The rebel forces captured Malakal after repulsing an attack from soldiers from the government. A spokesperson for the rebels said the group had pursued and flushed out the troops from around the nearby airport.
The spokesperson via a phone call from Addis Ababa the capital of Ethiopia said the insurgent forces were now in complete control of Malakal.
The government of South Sudan and rebels with Riek Machar the former Vice President as their leader, agreed on January 23 to a cease-fire that sought the end of violence that started on December 15 after current President Salva Kiir announced that his former Vice President Machar, who had been fired in July, led a coup that had failed.
Machar denies that accusation. In a very quick fashion, violence spread pitting members of the ethnic Dinka community led by Kiir against the Nuer group led by Machar.
The fighting since then has killed thousands and forced over 860,000 to flee their residences according to data released by the United Nations. Both sides resumed the peace negotiations last week in Addis Ababa.
A spokesperson for the army of South Sudanese said that the town of Malakal had been attacked earlier in the day by Machar forces and that fighting was still taking place.
South Sudan gained its independence in July of 2011 from Sudan and has the third largest oil reserves in sub-Saharan Africa.
While Unity state has halted its production of oil due to the ongoing violence, output in Upper Nile state thus far is unaffected and is currently pumping between 160,000 and 200,000 barrels daily, said the Foreign Minister of South Sudan Barnaba Marial Benjamin on February 11.
The low in sulfur crude from South Sudan is prized by buyers from Japan as a fuel that is cleaner burning for generation of power. The country is able to produce a capacity of up to 400,000 barrels daily.