Brent crude prices soared to $124 a barrel on Tuesday after European Union leaders agreed to ban almost 90% of Russian oil imports by the end of the year.

At 1:57 pm, the July contract Brent crude futures on the Intercontinental Exchange were trading at $124 per barrel.

This comes hours after the European Council agreed in principle on the sixth sanctions package against Russia over its invasion of Ukraine. The sanctions will immediately impact 75% of Russian oil imports. And by the end of the year, 90% of the Russian oil imported in Europe will be banned.

"This immediately covers more than two-thirds of oil imports from Russia, cutting a huge source of financing for its war machine," says Charles Michel, president of the European Council.

In March, Russia's deputy prime minister Alexander Novak had warned that crude oil prices could hit $300 per barrel if Western countries ban Russian oil imports.

The steep rise in crude oil prices will have a direct impact on India's foreign exchange outflow, fiscal deficit and inflation. The country imports around 86% of its annual crude oil requirement.

The sanctions against Russia will cover crude oil, as well as petroleum products, delivered from Russia to EU member states. However, a temporary exception for crude oil delivered by pipeline has been made.

"In case of sudden interruptions of supply, emergency measures will be introduced to ensure security of supply. In this respect, the (European) Commission will monitor and report regularly to the Council on the implementation of these measures to ensure a level playing field in the EU Single Market and security of supply," the European Council says.

The European Council said it will revert to the issue of the temporary exception for crude oil delivered by pipeline as soon as possible.

EU leaders urged the Council to finalise and adopt the new sanctions without delay, ensuring a well-functioning EU single market, fair competition, solidarity among member states, and a level playing field for phasing out EU dependency on Russian fossil fuels.

The sanctions include "de-SWIFTing" of Sberbank, the largest bank in Russia, a ban on three more Russian state-owned broadcasters, and targeted sanctioning of individuals responsible for war crimes in Ukraine.

"I want to note that other elements in the package are also important. It is the de-SWIFTing of the Sberbank. The Sberbank is the biggest Russian bank, with 37% of the Russian banking sector. So this is good that we now de-SWIFT the Sberbank. There is a ban on insurance and reinsurance of Russian ships by EU companies; a ban on providing Russian companies with a whole range of business services," says Ursula von der Leyen, president of the European Commission.

EU leaders urged Russia to immediately stop its indiscriminate attacks against civilians and civilian infrastructure, and to withdraw, immediately and unconditionally, all its troops and military equipment from the entire territory of Ukraine within its internationally recognised borders.

European Council

Brent crude hits $124 per barrel as EU agrees to ban 90% of Russian oil