The new sanctions represent a gradual but significant escalation in the West’s efforts to impose costs on Russia for supporting the rebels, a risk to which markets had become complacent after Russia had appeared to accept the results of Ukraine’s presidential elections in May.

Ukraine’s new President Petro Poroshenko said Russia continued to supply both men and sophisticated weaponry to the rebels in recent weeks, frustrating his attempts to crush the rebellion.

Previous rounds of punitive measures had only targeted people close to the Kremlin or smaller commercial operations controlled by them, but the new measures will hit a company that produces over 4% of world oil supply, and the country’s second-largest natural gas producer, as well as two large banks that have played a critical role in funding the state’s economic program in recent years.

The ruble fell 1.3% to a six-week low of 34.96 against the dollar, while the benchmark MICEX share index fell 2.7% by mid-session.

The Treasury department has said last night it bar access to U.S. capital markets for Russia’s largest oil company, OAO Rosneft, which produces around a quarter of the country’s 10 million barrel-a-day output, and for OAO Novatek. That means neither company will be able to borrow any medium- or long-term finance in dollars. Rosneft depositary receipts fell nearly 6% in early trading in London, while Novatek’s were down over 10% at one stage.

The sanctions won’t affect the companies’ day-to-day operations, but will severely crimp their ability to raise money to complete future projects, such as Rosneft’s liquefied natural gas project in Sakhalin off Russia’s Pacific coast, where it partners with ExxonMobil Corp. , and Novatek’s massive Yamal LNG project.

In addition, Rosneft has $91 billion in debt outstanding after it borrowed to buy BP Plc (BP) out of the TNK-BP joint venture last year. Of that, it needs to refinance $25 billion before March next year. Novatek needs $17 billion in bank debt to develop Yamal LNG, according to analysts at Sberbank in Moscow.

The Russian Foreign Ministry Thursday issued a withering statement in reaction to the move, calling the new sanctions “a primitive attempt to exact revenge for the fact that events in Ukraine aren’t developing according to Washington’s scenario.”

President Vladimir Putin, meanwhile, was quoted by agencies as saying the sanctions would lead to “a dead end”.

In Europe, meanwhile, E.U. leaders said at a summit in Brussels they would halt all investments in Russia through two multilateral development banks, the European Investment Bank and the European Bank for Reconstruction and Development.

The two banks invested around €2.5 billion ($3.4 billion) in Russia last year, and traditionally focus on the kind of low-profile public services such as heating and water supply.

Those sectors have received relatively little attention in recent years from the Kremlin, which has preferred to focus on flashy prestige projects such as the Sochi Winter Olympics.

Europe has repeatedly shied away from matching the extent of U.S. sanctions on Russia due to its much bigger trade with the country. It’s particularly reliant on Russia for imports of natural gas–Russia accounts for just under a quarter of E.U. gas supply.

The weakness of the European response has angered many of the E.U.’s members in central and eastern Europe, which only emerged from Russian domination 20 years ago. Lithuanian Prime Minister Dalia Grybauskaite said after the meeting that “even today’s sanctions will not influence sufficiently the Kremlin’s behavior in Ukraine.”

But even without formal sanctions, trade between the E.U. and Russia has fallen sharply this year. In the first four months of the year, exports were down 11% from a year earlier at €35 billion, while imports were down 9% at €65.8 billion, according to figures released Wednesday by Eurostat.