Oil prices jump after European Union leaders agreed to ban most Russian crude imports

Oil prices jumped after European Union leaders late Monday reached an agreement to ban 90% of Russian crude by the end of the year.

During Asia hours on Tuesday, US crude futures contracts For the month of July, it rose 2.81% to $118.29, while Brent crude futures contracts It rose 0.93% to $122.80. Contracts for August also rose: US crude rose 2.84% to $115.42, and Brent crude rose 1.17% to $118.98 a barrel.

Agreement ends stalemate after Hungary initially holding conversations. Hungary is a major user of Russian oil and its leader, Viktor Orban, has been on friendly terms with Vladimir Putin, Russia.

Charles Michel, president of the European Council, said the move would immediately cover 75% of Russia’s oil imports.

The ban is part of the sixth EU sanctions package against Russia since its invasion of Ukraine. Talks to impose an oil embargo have been underway since the beginning of the month.

He explained that “the European Council agrees that the sixth package of sanctions against Russia will include crude oil, as well as petroleum products, which are delivered from Russia to member states, with a temporary exception for crude oil transported through a pipeline.” May 31 statement from European Council.

The European Council added that in the event of “sudden interruptions” of supplies, “emergency measures” would be taken to ensure the security of supplies.

European Commission President Ursula von der Leyen said at a press conference that this temporary exception covers the remaining Russian oil that has not yet been banned.

“We agreed that the council would get back to the topic as soon as possible one way or another. So that’s a topic we’ll come back to and where we still have to work, but that’s a big step forward for what we did today,” he said, referring to the temporary exemption.

Von der Leyen explained that the temporary exemption was granted so that Hungary, along with Slovakia and the Czech Republic – all connected to the southern part of the pipeline – would have access that they could not easily replace.

Roughly 36% of the EU’s oil imports come from Russia, a country that plays a large role in global oil markets.

The ban could exacerbate concerns about an already tight energy market. Energy prices have risen over the past year, which has contributed to rising inflation in many countries.

Vivek Dhar, director of energy commodities and mining research at the Commonwealth Bank of Australia, wrote in a note following the news.

“Another ban on Russian crude oil delivered by shipment will reduce already strained supply amid rising demand due to the start of the driving season in [the] United States,” wrote Avtar Sandu, Senior Director of Commodities at the Philip Nova trading platform.

Meanwhile, OPEC+ is expected to stick to its original plan of a modest increase of 432,000 barrels per day for July, Sandow added.

CNBC’s Natasha Turak contributed to this report.