Oil prices soared as the European Union proposed a six-month ban on Russian crude and a year-end ban on processed products.

Brent futures increased by 4.5 percent to near $110 (€104) a barrel. The EU's plan is the bloc's most crucial energy reaction to the Ukraine crisis, as it strives to reduce its reliance on Moscow. Apart from outright prohibitions on oil imports, the EU is also targeting insurers, which might jeopardize Moscow's ability to ship oil anywhere in the world.

Traders have been acutely focused on how the war will damage Russia's output, one of the world's largest producers.

"This is a total ban on all Russian oil imports, seaborne and pipeline, crude and refined," European Commission President Ursula von der Leyen stated.

"We will ensure that the phase-out of Russian oil occurs in a controlled manner, allowing us and our partners to secure alternative supply routes and minimizing the impact on global markets."

Europe is heavily reliant on Russian crude, and certain countries will find it simpler to transition to alternative sources of supply than others. Last year, Russia shipped approximately 720,000 barrels per day to European refineries via its major pipeline. Compared to the 1.57 million barrels per day, it ships via sea from its Baltic, Black Sea, and Arctic ports.

"It is a critical stage on the road to zero Russian oil in the European Union," said Paul Horsnell, Standard Chartered's head of commodities research. "While self-sanctioning has already significantly reduced the flow, it is critical to draw the line officially."

Hungary and Slovakia, which opposed a rapid cutoff of Russian oil supplies and relied heavily on them, would be permitted until the end of 2023 to apply the sanctions, according to persons familiar with the subject.

The phase-out will occur when the globe is experiencing a refined-products deficit.