Israel barred Palestinian banks from making shekel deposits in Israeli banks and will run Palestinian electricity at half-strength for an hour each day.
In addition, Israel is withholding $116 million of Palestinian tax revenue.
The punitive measures are in response to the reconciliation agreement signed last month between the Palestinian Fatah Party, which rules the Palestinian Authority in the West Bank, and Hamas, the militant group that governs Gaza, according to Haaretz.
Israel, the United States and the European Union consider Hamas a terrorist organization. Israel suspended peace talks with the Palestinian Authority in April and said they would not resume so long as the two Palestinian factions are working together.
The reduction in electricity will take effect on West Bank Palestinians daily between 1 p.m. and 1:30, and 7 p.m. and 7:30. The Israel Electric Company pointed to a $154 million debt owed by the Palestinian Jerusalem District Electric Company as the reason for the measure.
With the restriction on shekel transfers, Palestinian banks now will be unable to exchange shekels for foreign currency, a right established in a 1994 Israeli-Palestinian economic agreement.