Vladimir Putin
Russia has agreements with international oil majors to explore its Arctic territoryReuters

The United States and European Union have made plans to halt oil exploration in Russia by some of the world's biggest oil majors, according to Reuters sources.

The move would stop billions of dollars in planned oil exploration, from companies including Exxon Mobil and BP that was set to take place in the Russian arctic.

The US and EU have stepped up sanctions against Russia as the allies accused Moscow of fuelling the conflict in eastern Ukraine.

The previous round of sanctions targeted key sectors of the Russian economy, including the defence, energy and banking sectors.

While a ceasefire has been agreed in eastern Ukraine, the Western powers remain sceptical about Russian President Vladimir Putin's willingness to pull back from Ukraine. With reports that the ceasefire has been broken in some instances, the US and EU want to keep up the pressure on Moscow to support the peace agreement.

The proposed measures, which remain undecided, would mark a significant escalation in the economic standoff between Russia and the West, as it would target the main lifeline of Russia's economy.

Exxon signed a $3.2bn deal with Russia's state-run oil giant Rosneft in 2011 to develop Russia's Arctic fields.

While the country remains one of the biggest oil producers, its existing oilfields are considered to be in decline, making the Arctic exploration critical to its future as a leading energy supplier.

Meanwhile, officials from the EU are set to resume talks on tightening sanctions against Russia on Thursday.

The EU measures being discussed relate to banning the sharing of energy technology and services with Russia. If the measures are passed, the US is likely to follow suit with a similar package of sanctions.