Sanctions on Russia would boomerang, Putin warns US

Russian President Vladimir Putin on Thursday warned the United States that its latest round of sanctions would do more harm to US business interests than Russia and that the current stalemate in bilateral relations has already hurt businesses of both countries.

US President Barack Obama on Thursday announced broader sanctions against Russia, targeting two major energy firms, including Rosneft, a pair of powerful financial institutions, eight weapon firms and four individuals.

Report of the new sanctions pulled down Russia's benchmark MICEX 2.6 per cent in early afternoon trading on Thursday even as shares of Russia's biggest oil company, Rosneft, was down nearly 5 per cent.

The new wave of sanctions were announced amidst Russia's efforts to rein in the escalating conflict in neighbouring Ukraine, which the US and its NATO allies believe to be backed by the Kremlin.

The US sanctions that stopped short of fully cutting off key sectors of Russia's oil economy, could still be imposed if Russia fails to abide by the West's demands to stop supporting pro-Russia insurgents who have destabilised eastern Ukraine.

Insurgents, believed to be backed by Russia, have been fighting government troops in eastern Ukraine for four months now in a conflict that is estimated to have killed over 400 people and displaced tens of thousands.

The conflict took off shortly after the mostly Russian-speaking Ukrainian peninsula of Crimea voted to join Russia.

In televised comments on Thursday, Putin said the sanctions are "driving into a corner" relations between the two nations as well as the interests of American companies and "the long-term national interests of the US government and people."

Putin warned Washington that the sanctions will backlash against American companies working in Russia.

Moscow-based investment bank Sberbank-CIB said in a note to investors that Russian companies cannot replace long-term loans from the US immediately.

"While Asian and Middle Eastern money can step in to fill the gap, we expect that this will take time," the note said, adding that borrowing will also cost more.

Rosneft has a multibillion-dollar deal with ExxonMobil, which among other things allowed Exxon to develop lucrative oil fields in Russia.

"We gave this American company the right to work on the shelf," Putin said in Brazil, referring to Exxon's potential exploration on the Russian Arctic shelf. "So, what, the United States does not want it to work there now?"

Russia's foreign ministry dismissed the sanctions as "bullying" and signalled that it was ready to fight back.