The stop-start peace talks, brokered by the east African regional bloc IGAD and held in Addis Ababa, have resulted in several ceasefire deals -- but each has been violated in a matter of hours.
The talks resumed last week but have again paused for Christmas, with mediators now laying the groundwork for a major regional summit on the conflict.
"If we fail to strike a deal during the coming summit, the IGAD leaders have been saying that there will be strong actions, including sanctions," Ethiopia's Prime Minister Hailemariam Desalegn told reporters.
"It is true that there is no clear agreement between the negotiating parties... but that doesn't mean that things are falling apart," he said, adding he was nevertheless "frustrated" by the lack of progress.
"In order to implement sanctions, we have to be sure that there is no other options, that this is a last resort. We have patience and we will continue to be patient for some time," the prime minister said.
Fighting broke out in South Sudan, the world's youngest nation, in December 2013 when President Salva Kiir accused his sacked deputy Riek Machar of attempting a coup.
The fighting in the capital Juba set off a cycle of retaliatory massacres across large swathes of the country, pushing it to the brink of famine.