The incident occurred on Wednesday on a road some 250 kilometres west of the capital Juba, close to the small town of Maridi, with the victims including locals who tried to scoop up the fuel spill.
"According to the reports that we received, the death toll is 186. The number of injured is bigger than that. We are unable to ascertain the actual number up to now," South Sudan's Information Minister Michael Makuei told reporters, confirming earlier reports that at least 150 were dead.
"All the flags are expected to be at half mast with effect from today. The president and the government extend heartfelt condolences to the families of the victims," he added.
Local media reports said doctors were struggling to cope with limited supplies to treat severe burns, including a lack of painkillers.
The local government director of Maridi, John Saki, told South Sudan's Gurtong news site that about a thousand people crowded around the tanker to gather fuel after it crashed on the roadside, with many coming from a nearby school.
"Some people are burned all (over their) legs, some the hands, some the whole body, the back," one witness told Radio Tamazuj. "They look like a white person."
Fuel leaks and oil tanker accidents in Africa often draw huge crowds scrambling to scoop up the fuel, resulting in many deaths due to accidental fires.
One of the worst such accidents was in Nigeria in 1998, when over 1,000 people died in the southeastern Delta State when a pipeline exploded as people tried to steal fuel.
Radio Tamazuj said dozens of bodies were burned beyond recognition and were being buried in a mass grave.
South Sudan is the world's youngest nation, having gained independence from Khartoum in 2011. It descended into civil war in December 2013 when President Kiir accused Riek Machar, his former deputy and now a rebel leader, of planning a coup.
The violence has left tens of thousands of people dead and the impoverished country split along ethnic lines.
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