Sudanese troops are on the outskirts of the disputed oil town of Heglig, captured on Tuesday by South Sudan, escalating the prospect of all-out war between the two countries.

The armed forces are advancing toward Heglig town, Sudanese Army representative Al-Sawarmi Khalid Saad told reporters in Khartoum, according to Reuters. The situation ... will be resolved within hours.

The news comes hours after the African Union warned on Friday that fighting between South Sudan and Sudan could escalate into a disastrous war.

The violence has brought the two sides closer to a full-blown conflict than at any time since South Sudan seceded last July, under a peace deal ending decades of civil war.

African Union Peace and Security Council Commissioner Ramtane Lamamra said the body was demanding an immediate and unconditional withdrawal of South Sudan's forces from the area, Reuters reported.

The Council is dismayed by the illegal and unacceptable occupation by the South Sudanese armed forces of Heglig, which lies north of the agreed border line of 1st of January 1956, Lamamra told reporters following a meeting late on Thursday.

The feeling within the Peace and Security Council is that it is time now for the two leaders ... to display the required leadership so that the two countries would avoid a disastrous war which the two people do not need.

The latest series of attacks came after South Sudanese troops were attacked by Sudanese forces on Monday in the town of Teshwin, according to a representative of the South Sudanese army.

After repulsing the attack, South Sudanese troops then pursued Sudanese troops across the border into Heglig.

The Heglig oil fields are a vital strategic resource, accounting for more than one-half of Sudan's domestic oil production.

Since South Sudan's secession, both countries have been locked in a battle for control of the ill-defined border areas.

South Sudan has been particularly hard hit by the ongoing conflict, after it was forced to shut down its roughly 350,000-barrel-per-day oil output in January because of a dispute over how much it should pay to export crude via facilities in Sudan.

The shutdown has crippled the South Sudanese government, which relies on oil export for 98 percent of its revenue.