The Kremlin warns it will retaliate against the sanctions, stemming from its invasion of Ukraine, in a way that will have a ``significant negative impact'' on the Lithuanian people, raising fears of a direct confrontation between Russia and NATO.
A look at why tensions are rising over Kaliningrad, a part of Russia on the Baltic Sea that is separated from the rest of the country:
Russia's Westernmost Territory
The Kaliningrad region once was part of the German province of East Prussia, which was taken over by the Soviet Union after World War II in line with the 1945 Potsdam agreement among the Allied powers.
East Prussia's capital of Konigsberg was renamed Kaliningrad, for Mikhail Kalinin, a Bolshevik leader.
An estimated 2 million of Germans fled the territory in the final months of World War II, and those who stayed were forcibly expelled after hostilities ended.
The Soviet authorities developed Kaliningrad as a major ice-free port and a key center of fishing, encouraging people from other regions to move into the territory. Since the Cold War era, Kaliningrad also has served as a major base of Russia's Baltic fleet.
But since the collapse of the Soviet Union and the independence of the Baltic countries, Kaliningrad finds itself separated from the rest of Russia by Lithuania, Latvia and Estonia, now all NATO members. To the south is Poland, another NATO member.
As Russia's relations with the West have soured, Kaliningrad's military role has grown. Its location has put it in the forefront of Moscow's efforts to counter what it described as NATO's hostile policies.
The Kremlin has methodically bolstered its military forces there, arming them with state-of-the-art weapons, including precision-guided Iskander missiles and an array of air defense systems.
As the region's military significance has grown, its dependence on goods coming through Poland and Lithuania has made it particularly vulnerable.
Lithuania emphasized that the ban on the movement of sanctioned goods was part of the fourth package of EU sanctions against Russia, noting it only applies to steel and ferrous metals starting on June 17.
The government in Vilnius rejected Russia's description of the move as a blockade, stressing that unsanctioned goods and rail passengers can still move through Lithuania.
In line with the EU decision, coal will be banned in August and shipments of oil and oil products will be halted in December.
Moscow Mulls A Response
Moscow formally protested the halt of shipments to Kaliningrad as a violation of Russia-EU agreements on free transit of goods to the region.
Kaliningrad Gov. Anton Alikhanov said the ban will affect up to half of all items brought into the region, including cement and other construction materials.
Nikolai Patrushev, the powerful secretary of Russia's Security Council and a close confidant of President Vladimir Putin, visited Kaliningrad on Tuesday to meet with local officials.
He described the restrictions as ``hostile actions'' and warned that Moscow will respond with unspecified measures that ``will have a significant negative impact on the population of Lithuania.''
Patrushev didn't elaborate, but Alikhanov suggested that the Russian response could include shutting the flow of cargo via the ports of Lithuania and other Baltic nations.
However, Lithuania has significantly reduced its economic and energy dependence on Russia, recently becoming the first EU country to stop using Russian gas. It no longer imports Russian oil and has suspended imports of Russian electricity.
The transport of most Russian transit via Lithuanian ports already has been halted under EU sanctions, but Moscow could move to restrict transit for cargo from third countries through Lithuania.
Putin will decide Russia's respond after receiving Patrushev's report.
Russia's standoff with Lithuania is part of their rocky relationship that dates back to Moscow's annexation of the country, along with Estonia and Latvia, in 1940.
The three pressed their move toward independence under former Soviet leader Mikhail Gorbachev and regained it when the USSR collapsed in 1991.
Fears Of Escalation
Some in the West long have feared that Russia could be eyeing military action to secure a land corridor between its ally Belarus and the Kaliningrad region via the so-called Suwalki Gap, a 65-kilometer (40-mile) strip of land in Poland along the border with Lithuania.
The rhetoric on Russian state TV has risen to a high pitch, with commentator Vladimir Solovyov accusing the West of brinkmanship that has set the clock ticking toward World War III.
Lithuanian Defense Minister Arvydas Anusauskas warned Wednesday of the danger of Russian provocations amid the Kaliningrad tensions.
``When you have a military force and they are ruled by the half-witted, I apologize for the expression, of course you can expect everything,`` he said, adding that Lithuania feels confident and relies on its NATO allies.
With the bulk of Russia's military bogged down in Ukraine, any use of force in the Baltics could be beyond Moscow's conventional weapons capability.
Estonian Prime Minister Kaja Kallas said she doesn't think there is a military threat to Lithuania, adding that Russia was trying to raise pressure on the EU to ease the sanctions.
``Russia is very good in playing on our fears so that we would, you know, step back from our decisions,'' Kallas said in an interview with The Associated Press.
A Russian attempt to use force against Poland or Lithuania would trigger a direct conflict with NATO, which is obliged to protect any of its members under its charter's mutual defense clause known as Article 5.
On Tuesday, US State Department spokesman Ned Price emphasized Washington's ``ironclad'' commitment to that clause, which he described as NATO's ``bedrock'' principle.
Russia's Deputy Foreign Minister Sergei Ryabkov responded by warning the EU and NATO against ``dangerous rhetorical games'' over Kaliningrad.
``Certain influential and powerful forces in the West are doing all they can to further exacerbate tensions in relations with Russia,'' he said, adding that ``some simply have no limits in inventing scenarios when a military confrontation with us would look inevitable.''