European Union leaders have agreed in principle to cut 90 percent of oil imports from Russia by the end of 2022, with the exemption of oil received via pipelines.

Hungarian Prime Minister Viktor Orban hailed the exemption that has allowed his country to keep receiving cheap crude from Moscow.
Hungarian Prime Minister Viktor Orban hailed the exemption that has allowed his country to keep receiving cheap crude from Moscow. (Reuters)

Oil prices have extended gains after the EU agreed to slash oil imports from Russia, fuelling worries of a tighter market already strained for supply amid rising demand ahead of peak US and European summer driving season.

Brent crude for July, which expires on Tuesday, rose $2.19, or 1.8 percent, to $123.86 a barrel at 0650 GMT, after earlier rising to $124.10 - its highest since March 9. The more active August contract rose $2.25 to $119.85.

US West Texas Intermediate (WTI) crude was trading at $119.12 a barrel, up $4.05, or 3.5 percent, from Friday's close. There was no settlement on Monday due to a US public holiday.

Both benchmarks have posted daily gains since Wednesday.

European Union leaders agreed in principle to cut 90 percent of oil imports from Russia by the end of 2022, resolving a deadlock with Hungary over the bloc's toughest sanction yet on Moscow since the invasion of Ukraine three months ago.

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Compromised deal

Hungarian Prime Minister Viktor Orban has hailed the exemption in the EU Russian oil ban that allowed his country to keep receiving cheap crude from Moscow.

After weeks of negotiations between EU and Budapest, bloc leaders late Monday struck a compromise deal that banned Russian oil imports delivered by tankers, but left in place those received via pipelines - which is how landlocked Hungary gets the Russian crude key to its economy.

"Families can sleep peacefully tonight, we kept out the most hair-raising idea," Orban said in a video message posted on his Facebook page.

"We have reached an agreement that states that countries that receive oil through pipelines can continue to operate their economies under the previous conditions," he said.

Orban had threatened to veto the deal and warned that halting supplies would wreck his country's economy.

A blanket import ban "would have been unbearable for us...like an atomic bomb, but we managed to avoid this," said Orban.

READ MORE: US to discuss India's import of cheap Russian oil amid Ukraine assault

Source: TRTWorld and agencies