“Given Russia’s direct military intervention and blatant efforts to destabilize Ukraine, we have deepened our sanctions against Russia today, in concert with our European allies. These steps underscore the continued resolve of the international community against Russia’s aggression," Treasury Secretary Jacob J. Lew said in a statement.
The new measures from both the U.S. and E.U. are aimed directly at Russia's banks and its emerging offshore oil sector, which has seen significant Western investment in recent years as supplies of its onshore oil are decreasing.
Despite the tenuous cease-fire, the additional sanctions are "being imposed in direct response to the actions Russia took in Ukraine over the last month," a senior administration official said Friday. They include sending heavily armed Russian forces and lethal equipment into Ukraine, supporting pro-Russian rebels and firing over the Ukrainian border.
U.S. officials said the new sanctions are designed to be rolled back should Russia abide by all 12 points of the cease-fire agreement, including withdrawing its troops and releasing Ukrainian hostages.
“Russia’s economic and diplomatic isolation will continue to grow as long as its actions do not live up to its words. Russia’s economy is already paying a heavy price for its unlawful behavior," Lew said, noting that inflation has grown and growth has plummeted in recent months thanks to previously announced sanctions.
The Department of Treasury expanded the sanctions to include Russia's largest financial institution, Sberbank of Russia. The U.S. and European sanctions prohibit Western companies from taking on any debt agreements with six Russian banks that last more than 30 days, cutting off Russia's largest banks from long-term financing with the West.
The new actions shut the banks "out of the U.S. and European financing markets for everything other than very short term debt," a senior administration official said, cutting the banks off from long-term, lucrative debt arrangements.
About 60 percent of Russia's exports come from oil and gas. Russia is increasingly looking toward offshore drilling in the Arctic and in shale. Western companies are as well.
The new sanctions will give Western companies until Sept. 26 to wind down the exchange of goods, services and technology to five Russian energy companies: Gazprom, Gazprom Neft, Lukoil, Surgutneftegas and Rosneft.
The sanctions will not completely cut off work between these companies and the West, and does not include financial services not related to certain projects with these companies. Rather, the goal is to make the deep-water and shale projects more difficult to continue because they are so reliant on Western technology, hardware and expertise.
"It’s really the U.S. and European companies that have expertise for deep water and shale," a senior administration official said.
ExxonMobil began drilling in Russia's arctic territory last month, and companies including British Petroleum and Shell have enacted deals with Russian companies.
A senior administration official said U.S. companies "understand why we're doing what we're doing."
The Treasury Department has designated and blocked assets of five Russian state-owned defense technology firms.