Russian stock markets were sharply lower on Thursday morning following the announcement of new sanctions by the U.S and the European Union, and analysts warned that tougher penalties were expected in the coming months.
U.S. President Barack Obama announced the fresh sanctions on Wednesday evening, amid fears that tensions between pro-Russian separatists and Ukraine's military could escalate further following the annexation of Crimea by Russia back in March.
The package was the most wide-ranging round of penalties so far, with Russia's state oil producer Rosneft hit. Other energy, financial and defense firms were also targeted, including Vnesheconombank, Gazprombank, gas producer Novatek and weapons maker Kalashnikov Concern.
Lending to these companies has now been prohibited in the U.S., meaning they will lack access to the country's debt markets. This builds on the financial and travel limits imposed earlier in the year.
Russian President Vladimir Putin responded to the most recent sanctions, saying that relations between the U.S. and Russia were in danger of reaching a "dead end" and could damage U.S. business interests in his country, according to reports.
On Thursday morning, Reuters reported that the Russian Foreign Ministry said it would not tolerate "U.S. sanction blackmail" and reserved the right to retaliate.