Ukraine Strikes Russia

Ukraine struck a Moscow oil refinery in a drone strike and has stepped up attacks on Russian-occupied Crimea. Analysts say Kyiv is trying to raise the cost of Russia's four-year war against it. Experts warn Russia could escalate as Ukraine’s pressure campaign continues. A string of political victories and deep-strike successes by Ukraine has revived hopes that the war could be shifting in Kyiv's favor, though analysts warn that efforts to raise the conflict's cost for Russia risk triggering further escalation.

After more than four years since Russia's full-scale invasion, Ukraine launched an unprecedented drone strike on Gazprom's Moscow Refinery, triggering a huge explosion and sending black plumes of smoke billowing into the sky over the Russian capital. The attack, which blew the lid off a storage tank, showcased Kyiv's enhanced mid- to long-range drone capabilities and extended a series of strikes on Russia's energy infrastructure. Ukraine has also stepped up its strikes on Crimea, which Russia seized by force in 2014, as part of a strategy to isolate the peninsula, and has benefitted from political tailwinds in recent weeks. S.

President Donald Trump signaled the potential for renewed American support of Kyiv, the election of Hungarian Prime Minister Peter Magyar removed a major obstacle to Ukraine's integration into the European Union and Ukrainian President Volodymyr Zelenskyy received praise for turning the diplomatic tables on Russian President Vladimir Putin with an open letter that proposed face-to-face talks. -Iran peace deal also appears to have pushed the Russia-Ukraine war back up the geopolitical agenda, while tumbling oil prices are seen as likely to cut into Moscow's recent windfall.

Analysts, however, told CNBC that Ukraine's depleted air defense constitutes a major obstacle to its battlefield success and the potential for Russia to escalate the situation even further remains a danger. " The incident underscored Ukraine's growing military confidence, Roos said, as well as highlighting Kyiv's understanding that it must continue to hit Russia "where it hurts the most," by cutting Russia's energy revenues. "It's a bad time for Russia. The number of bankruptcies of [small and medium-sized enterprises] has been on the rise," Roos told CNBC in a phone interview.

6% year-over-year as of mid-June, lower than a month earlier, according to the Bank of Russia. But Swedish intelligence recently alleged the country was manipulating economic data and that the true inflation rate could be much higher, perhaps as high as 15%. " "Even when oil prices skyrocketed and went to the roof at the peak of the war in the Middle East, Russia had not increased its production. So, yes, it benefitted from a windfall, but production was not increased — so the effects were rather limited," Roos said.

Roos said it's difficult to see how Putin can back out of the war without losing face and, therefore, potentially losing power. "It's like hiking at high altitude. When you've taken the path, there is no way back. And that is what makes it dangerous for Europe because the risks of escalation are always there," he added.

Russian Deputy Foreign Minister Sergei Ryabkov said Tuesday that Moscow has observed " signs of a shift " in the Trump administration's position on understandings reached at a summit in Alaska last August, according to Russian state news agency Tass. S. would continue. " "Ukraine is basically demonstrating to the Russians that the cost of this war is only increasing.

Not just for Putin's regime but for ordinary Russians," Seskuria told CNBC by video call. " Russian authorities, which had already imposed fuel restrictions in Crimea, recently suspended fuel supplies to the public in the occupied region as Ukrainian attacks persist. "The end game is at hand and, therefore, we now have the risk of escalation," Christopher Granville, managing director at TS Lombard, told CNBC by telephone. "Russia's territorial agenda is now limited to the remaining northwestern corner of the Donetsk oblast, which is the last part of the Donbas," Granville said.

" Two major cities in the region, Kramatorsk and Sloviansk, are still to fall to Russian forces, Granville said. "