EU bans most Russian oil, Zelenskiy calls Donbas situation 'extremely difficult'

KYIV (Reuters) - European Union leaders agreed to ban most imports of Russian oil to the 27-nation bloc as Ukrainian and Russian forces battled on the outskirts of Sievierodonetsk, the last city still held by Kyiv in Ukraine's strategic Luhansk province.

In the bloc's toughest sanction on Moscow since the invasion of Ukraine three months ago, European Council President Charles Michel said the ban agreed at an EU summit in Brussels would immediately cover more than two-thirds of oil imports from Russia and cut a "huge source of financing for its war machine." 

The leaders said they had agreed to cut 90% of oil imports from Russia by the end of this year, with exemptions for Hungary - a landlocked country that relies heavily on crude piped from Russia - and others concerned about the ban's economic impact.

EU leaders also agreed to cut off the largest Russian bank, Sberbank, from the SWIFT system and to ban three more Russian state-owned broadcasters, Michel added.

The announcement came as Russia pressed its attacks in Ukraine's eastern Donbas region, where Ukrainian President Volodymyr Zelenskiy said the situation remained "extremely difficult".

Russia has been seeking to seize the entire Donbas, consisting of Luhansk and Donetsk which Moscow claims on behalf of separatist proxies.

Capturing the twin cities of Sievierodonetsk and Lysychansk on the banks of the Siverskyi Donets river would give Moscow effective control of Luhansk and allow the Kremlin to declare some form of victory after more than three months of war.

But by focusing on a battle for the single small city, Russia could leave other territory open to Ukrainian counterstrikes.