Russia's Foreign Ministry has responded angrily to the raft of new sanctions imposed by the European Union and the United States, saying that the EU had buckled under "US blackmail" and chosen the path of sanctions.
The EU had "succumbed to the blackmail of the US administration and contradicting its own interests, followed the path of sanctions" against Moscow, a Foreign Ministry statement said.
Following months of pressure from the White House, the European Union has tightened measures against Russia in response to its role in the ongoing crisis in Ukraine. The bloc has halted new loans to Moscow from the London-based European Bank for Reconstruction and Development, while it also agreed to consider sanctions against Russian companies.
The US has imposed much tougher measures, targeting Russian energy and defence companies, as well as Russian banks.
Russia's Deputy Foreign Minister said the penalties passed by the US would complicate US-Russia relations and that Moscow's response would be "painful" for Washington, according to the Interfax news agency.
US President Barack Obama imposed penalties on Russia's largest oil company Rosneft, its second largest gas producer Novatek and its third biggest bank Gazprombank.
The sanctions did not freeze the companies' assets and will not prevent American firms from doing business with them but the moves will effectively shut off medium and long-term dollar funding for the Russian entities.
Warning of further penalties if Russia did not act to resolve the insurgency in eastern Ukraine, Obama said Moscow had not shown willingness to de-escalate the crisis.
"We have emphasised our preference to resolve this issue diplomatically, but we have to see concrete actions, not just words, that Russia is, in fact, committed to trying to end this conflict along the Russia- Ukraine border," he said.
The effectiveness of the American sanctions ultimately rests on the willingness of Europe to follow suit in the future.