Ukraine has warned it might cut Russian oil and gas flows to Europe and ban Russian airlines from crossing its airspace, as Moscow criticised the country for suspending a ceasefire at the crash site of MH17.
The measures are part of a sanctions bill targeting Russia that will be submitted to parliament, Prime Minister Arseniy Yatsenyuk said in Kiev.
Yatsenyuk explained it could include complete or partial bans on transit of all manner of resources, including energy resources and overflights.
Ukraine is the key country for the transport of Russian oil and gas to Europe.
Previous energy disputes have resulted in supply cuts for European consumers.
Russia in June halted its gas deliveries to Ukraine because of a payment dispute.
Yatsenyuk said the Ukrainian parliament was expected to vote on the bill on Tuesday.
The draft also envisages sanctions against 172 people - Russians and other nationalities - as well as against other countries and 65 companies for "supporting and financing terrorism".
Kiev has declared the pro-Russian separatist organisations in eastern Ukraine to be terrorist organisations.
Russia lambasted Yatsenyuk's announcement as a "PR move to prove to the West that Ukraine is on its side", the Interfax news agency reported, citing an unnamed foreign ministry official.
The official added that Moscow would retaliate once the sanctions were implemented.
Moscow also criticised Kiev for suspending a ceasefire at the crash site of Malaysia Airlines flight MH17, which was downed over eastern Ukraine in July.
The US and some of its allies accuse Russia of arming the separatists, who are believed to have shot down the jet with 298 people on board.
The move violates UN Security Council resolution 2166, which demands a cessation of hostilities to enable an independent investigation, the Russian Foreign Ministry said.
It added that the US, Australia and Lithuania had vetoed a Russian draft resolution criticising the Ukrainian decision.
"Again, the total hypocrisy of these countries has been exposed," it said.
Further raising tensions, Moscow said that it had detained five Ukrainian officers on war crimes charges.
Russia's Investigative Committee said it had evidence they ordered the use of heavy arms against civilians.
The commanders were among more than 400 Ukrainian soldiers who retreated to Russian territory after being surrounded by separatist forces along the border on August 3.
Ukraine said on Friday that 15 servicemen were killed and 79 were injured during the past 24 hours in fighting with separatists, mainly along the border with Russia.
Andriy Lysenko, the spokesman of Ukraine's National Security and Defence Council said the high number of injured was due to the use of imprecise "Grad" artillery systems by the separatists, the Interfax Ukraine news agency reported.
The government in Kiev accuses Russia of supplying the separatists with heavy weapons and fighters.
The rebels, in turn, accuse government forces of firing "Grad" missiles on civilian quarters in the besieged separatist cities of Donetsk and Luhansk.
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