Members of the National Militia rally for the termination of the 2003 agreement between Ukraine and Russia on the Sea of Azov outside the Verkhovna Rada building, Kyiv, capital of Ukraine, November 26, 2018. In 2003, the two countries signed the treaty, which defined the Sea of Azov as internal waters and guaranteed free navigation to all Ukrainian and Russian ships. Barcroft Media | Barcroft Media | Getty Images

Russia's seizure of three Ukrainian Navy vessels, and 23 crew members, on Sunday provoked international consternation. But the timing of the incident could be good for Ukraine, which hopes to see Western sanctions extended on its powerful neighbor. Moscow said the vessels had illegally entered its waters off the coast of Crimea. The incident, which Ukraine called an "an act of aggression," took place in the Kerch Strait, a channel that separates the Sea of Azov and Black Sea to the south of Ukraine and Russia, waters crucial to both economies.

Ukraine has reacted to the situation by declaring martial law for 30 days in certain districts bordering Russia. President Petro Poroshenko warned of the "extremely serious" threat of a land invasion and said martial law was necessary to bolster Ukraine's defenses. The latest incident could be good for Ukraine, however, in that it adds weight to arguments for sanctions on Russia — imposed after its 2014 annexation of Crimea from Ukraine — to be extended, analysts say. "To some degree it's good timing, from the Ukrainians' point of view," Tim Stanley, senior managing director for Russia at Control Risks, told CNBC on Tuesday. "There's been movements on the European side about perhaps relaxing sanctions against Russia, so from the Ukrainian point of view, the pressure needs to be kept up. Obviously, we're facing a G20 meeting at the weekend in Buenos Aires and there's potential for a Putin-Trump meeting and so the Ukrainian side needs to keep the pressure up domestically," he told CNBC's "Capitol Connection." Alex Brideau, director of Eurasia research at Eurasia Group, said Monday that the incident would likely lead to more sanctions on Russia. "The incident in the Kerch Strait and the Ukrainian reaction so far carry geopolitical implications, as well as effects on Ukraine's domestic politics," Brideau said in a note. "Western governments will side with Ukraine against Russia over the incident itself, making new sanctions against Russia likely. It is not clear which side made the first move in the strait. But the U.S. and EU will react to Russian ships firing on Ukrainian ships; Moscow's use of violence will stand out in the eyes of the West," he said, noting that the U.S. and EU had previously warned Russia over increased naval activity.

'Outrageous' violation

The incident comes before a G20 meeting in Brazil this weekend where Russian President Vladimir Putin could meet with President Donald Trump, who said Monday that he didn't like the situation, but refused to condemn the aggression. It makes it unlikely that Trump will put pressure on his Russian counterpart at the G20 summit to ease up on Ukraine, given the president's present and past reluctance to openly criticize Russia. So far, Trump seems content to let Europe handle the situation, remarking Monday that European leaders were "working on the situation," Reuters reported. The U.S. ambassador to the United Nations, Nikki Haley, was stronger in her criticism, calling Russia's action an "outrageous violation of sovereign Ukrainian territory" and said such "outlaw actions" made it hard for the U.S. to have a normal relationship with Russia. European Council President Donald Tusk took to Twitter on Tuesday to condemn the action and called on Russia to release the ships and sailors. Russia has so far refused to do so. Tweet: The U.S. and European Union currently have sanctions on Russia in place for its 2014 annexation of Crimea from Ukraine, as well as its role in a pro-Russian uprising in the east of the country, although Russia denied involvement in this. The EU must decide soon whether to extend those sanctions, which have seen asset freezes and travel bans on individuals alleged to have assisted in the annexation and sectoral sanctions in Russia. In September, the EU extended Ukraine-related sanctions on 155 persons and 44 entities until March, saying that its "assessment of the situation did not justify a change in the sanctions regime." A separate series of European Ukraine-related sanctions targeting specific sectors of the Russian economy are in place until January and there are sanctions on Crimea itself until June. Likewise, the U.S.' Ukraine-related economic sanctions on Russia are in place until March. Eurasia Group's Brideau said more sanctions were now likely. "The most that Washington and Brussels are likely to impose at this stage is more sanctions against individuals and entities. Stronger sanctions that might target new economic sectors or major Russian oligarchs are unlikely unless the episode escalates," he said. "New fighting would make sanctions escalation more likely but, even in this case, the potential for much stronger action against sovereign debt or Russian crude oil exports would remain low."

Bridge over troubled water

The latest episode is the latest chapter in strained relations between Russia and Ukraine, a former part of the now defunct Soviet Union. Needless to say, after the 2014 annexation of Crimea there's no love lost between Russia and Ukraine and the waters around the Crimean peninsula have become a part of their ongoing dispute. A bridge linking Crimea with the Russian mainland to the east, called the Kerch Strait Bridge, has only exacerbated the situation with Ukraine claiming it is designed to damage its economy. The bridge's construction in July 2017 has not gone unnoticed in Europe, with the EU sanctioning six companies involved in its assembly. "The Kerch bridge… (is) effectively creating a situation whereby Russia has direct control over what vessels enter the Sea of Azov and leave the Sea of Azov," Stanley said.