Russia on Saturday said it would "respond" after Iceland became the first country to suspend its embassy operations in Moscow.
"All of Reykjavik's anti-Russian actions will inevitably prompt a response," the Russian foreign ministry said in a statement, accusing Iceland of "ruining" relations between the two countries.
"We will take this unfriendly decision into account when we establish our relations with Iceland in the future," the ministry added.
Iceland on Friday said it would suspend work at its embassy in Moscow as of August 1 and asked Russia to limit its operations in Reykjavik.
"The current situation simply does not make it viable for the small foreign service of Iceland to operate an embassy in Russia," Foreign Minister Thordis Gylfadottir said.
In a symbolic move, staff could be seen taking down the Icelandic flag hanging from the side of the embassy in Moscow on Friday.
The Icelandic foreign ministry stressed that the decision "does not constitute a severance of diplomatic relations."
But since commercial, cultural and political ties with Russia were "at an all-time low," maintaining embassy operations in Moscow was "no longer justifiable," it said.
