US President Donald Trump has cancelled a planned meeting with his Russian counterpart Vladimir Putin over a naval clash between Ukraine and Russia.
On Sunday Russian border guards fired on three Ukrainian ships and seized their crews off the Crimean Peninsula.
Mr Trump said he would not meet Mr Putin at a G20 summit in the coming days, "based on the fact that the ships and sailors have not been returned".
German Chancellor Angela Merkel blamed the crisis "entirely" on Russia.
She said she would raise the issue with President Putin at the G20 meeting, which is due to be held in Argentina on Friday and Saturday.
Ukrainian President Petro Poroshenko has urged Nato to send ships to the area. He has implemented martial law across Ukraine's border regions for 30 days in response to the crisis.
On Thursday he announced that Russians living in Ukraine would soon face restrictions on bank withdrawals, changing foreign currency and travelling abroad.
What happened off Crimea?
The incident happened on Sunday, when two Ukrainian gunboats and a tug were sailing from Odessa to the port of Mariupol, in the Sea of Azov - which is shared between Russia and Ukraine.
The vessels were stopped from entering the Kerch Strait and confronted by FSB border guards. After a lengthy standoff, during which the Ukrainian tug was rammed, the ships began turning back towards Odessa, the Ukrainian government says.
The Russians opened fire, wounding at least three sailors, and seized the Ukrainian flotilla.
The Kerch Strait separates Russia from Crimea, a Ukrainian peninsula that was annexed by Russia in 2014.
Ukraine says Russia is deliberately blockading Mariupol and another Ukrainian port on the Sea of Azov, Berdyansk.
The 24 captured Ukrainian sailors have now been given two months in pre-trial detention by a court in Crimea.
What did Mr Trump and Ms Merkel say?
Mr Trump tweeted that "it would be best for all parties concerned to cancel my previously scheduled meeting" with Mr Putin, adding that he was looking forward to a "meaningful summit... as soon as this situation is resolved".
Based on the fact that the ships and sailors have not been returned to Ukraine from Russia, I have decided it would be best for all parties concerned to cancel my previously scheduled meeting....— Donald J. Trump (@realDonaldTrump) November 29, 2018
Also on Thursday, Ms Merkel accused Russia of restricting access to the Sea of Azov by building a bridge over the Kerch Strait.
Speaking alongside Ukrainian Prime Minister Volodymyr Groysman in Berlin on Thursday, she said the latest crisis was "entirely the doing of the Russian president" and accused Moscow of violating a 2003 agreement guaranteeing free movement in the area.
"I want the Ukrainian soldiers released," she said. "The Ukrainian side has asked us to act wisely. There is no military solution to these problems."
Analysis by Jonathan Marcus, diplomatic and defence correspondent
The call for Nato to deploy warships to the Sea of Azov raises a variety of diplomatic and practical problems.
In strict legal terms, Russia and Ukraine share access to its waters under a 2003 treaty. This, though, specifically states that warships from third countries can only enter the sea or make port visits there with the express permission of the other party.
Russia is hardly likely to give such permission. In practical terms, it could easily block the Kerch Strait as it did earlier this week, by placing a merchant vessel across the channel.
Nato in any case might see such a visit as more likely to inflame tensions.
It's more likely that Nato might seek to boost its naval deployments to the Black Sea, where its members - Bulgaria, Romania and Turkey - are uneasy about Russia's more assertive behaviour.
Indeed, the alliance says that its vessels have already spent some 120 days on patrol or exercises in the Black Sea this year, compared with 80 in 2017.
What is Russia's argument?
Mr Putin called the sea clash "a provocation" organised by Ukraine's authorities "in the run-up to the Ukrainian presidential election".
Mr Poroshenko has low popularity ratings. Recent polls suggest that only about 10% of the electorate plans to vote for him next year, with nearly 50% saying they would not vote for him under any circumstances, the Kyiv Post newspaper reported.
Mr Putin added that Mr Poroshenko's decision to impose martial law after a mere "border incident" was extreme, because it was not even imposed during the conflict with pro-Russian separatists in eastern Ukraine in 2014.
Russian state media report that Moscow has delivered a battalion of S-400 surface-to-air missiles to north Crimea, and also plans to build a new missile early-warning radar station there.
Mr Putin insisted that Russia's military response was appropriate as the Ukrainians had "trespassed" into Russia's territorial waters.
However, Ukrainian officials published a map on Wednesday, placing all three Ukrainian boats just outside Crimea's territorial waters at the time they were seized.