pro-russian separatist
A pro-Russian separatist from the Vostok (East) battalion poses for a picture atop a T-64 tank in Donetsk, eastern Ukraine. Reuters

The head of Russia's largest oil company Rosneft railed against US sanctions after Washington expanded economic penalties against Moscow.

"The decision to put Rosneft on the sanction list is groundless biased and illegal, as the company plays no role in the crisis in Ukraine," Rosneft CEO Igor Sechin said, as quoted by Itar-Tass news agency.

The state-owned company was the most high profile casualty on Washington's sanctions list, along with the country's second largest gas producer Novatek and its third biggest bank Gazprombank.

The sanctions did not freeze the companies' assets but will close off dollar lending in the medium and long-term.

Sechin said the penalties were "regretful" and would hurt Americans' interests in Russia.

"This decision is also detrimental to American stockholders of companies, American banks which cooperate on credit agreements."

"Rosneft is a budget-forming company for Russia," he said, adding "therefore, Russia's sovereign and independent policy, and the company itself, is a target of these sanctions."

Meanwhile Andrey Kostin, chief executive officer of VTB Group, said the sanctions threaten the stability of the financial system.

"These types of actions – applying large penalties – they can lead, unfortunately, in essence to the disintegration of the financial system," Kostin told Rossiya 24 television.

The US sanctions "affect the interest of hundreds of thousands, millions of people and corporate clients. Undoubtedly the consequences could be negative for the Russian economy," he added.

The United States and the European Union imposed fresh sanctions on Russia over its role in the Ukraine crisis on Wednesday. The latest penalties are the toughest measures yet and come after the allies initially imposed asset freezes and travel bans on Putin's inner circle, to limited affect.

The EU agreed to block loans for Russian public sector projects and consider deeper penalties in the future.