US President Donald Trump said he is ready to move in to a second phase of Russian sanctions after Moscow hit Ukraine with its largest air attack of the war.
Trump on Sunday signalled he may finally escalate sanctions on Moscow or its oil buyers, which he has so far delayed to pursue peace talks.
The European Union followed on Monday with a confirmation it is co-ordinating new sanctions with the US, echoing US Treasury Secretary Scott Bessent comments that Washington would need "European partners to follow us" if they were to exert further economic pressure.
The US President has grown increasingly frustrated with Putin as fighting intensifies despite repeatedly vowing to end the war within 24 hours.
Under the Biden administration, the US targeted Russia's biggest financial institutions and restricted companies from raising money through the US market, including leading natural gas company Gazprom.
Before Trump entered his second term in office, Biden blacklisted 183 vessels involved in Russian energy exports.
Last month, Trump slapped 50 percent tariffs on Indian exports to the US over its purchase of Russian oil.
Since Russia's invasion of Ukraine, China and India has continued to import large amounts of Russian oil and refine it into products sent on to the EU.
The EU's last sanctions package included a lower oil price cap, Nord Stream transaction ban, more shadow fleet sanctions, and a full ban on Russian bank deals.
Bessent hinted that the US and the European Union could heap "secondary tariffs on the countries that buy Russian oil" to bring Russian economic "collapse" and force Putin to negotiate peace.
On Sunday Trump said European leaders would visit the US on Monday or Tuesday to discuss how to resolve the war. He did not confirm what the second phase would entail.
"Following Bessent's comments on Sunday, it looks like the US administration is now looking more seriously at tougher sanctions on Russia," Senior Emerging Markets Economist at Capital Economics Liam Peach told The Independent.
"Russia's economy has adapted better than anyone had expected over the past three years to Western sanctions, in large part due to circumvention through third countries."
According to a Bloomberg report, the EU next sanctions package could target Russia's payment and credit card systems, crypto exchanges and impose restrictions on oil trade.
While the exact measures have not been outlined, sanctions so far have targeted Moscow's energy and financial sectors to limit its ability to fund war in Ukraine.
Sanctions like the EU's oil price cap, or US tariffs against India, are designed to limit Moscow's crude revenues, the cornerstone of its war coffers and economy.
"So far, the tariff threat on India hasn't worked and the US seems reluctant to hit China with higher tariffs, so it's hard to see how the US can produce a sanctions package that bites hard in practice," Mr Peach told The Independent.
"If the US really wants to squeeze Russia's economy, they will need to find a way to stop third countries from buying Russian oil."
Capital Economics estimate that Russia exported just over $200bn in energy products last year. A 50 percent cut in Russia's crude and petroleum exports could reduce export revenues by around $75bn.
But even a smaller fall in revenues could could weaken the ruble, push up bond yields, and put heavy pressure on Russia, ramping up pressure for fiscal tightening, Mr Peach said.