Ukraine's deep strikes raise cost of war and risk Russian escalation — CNBC

Ukraine is increasingly striking Russia's energy and logistics infrastructure in an attempt to raise the cost of the war for the Kremlin and weaken its economic capabilities, the article noted.

The temporary peace agreement between the U.S. and Iran appears to have pushed the Russian-Ukrainian war back to the top of the geopolitical agenda, while falling oil prices will cut into Moscow's profits.

Ukraine's depleted air defenses remain the main obstacle to battlefield success, and there is still a risk of further escalation from Russia, CNBC wrote, citing analysts.

Grégoire Roos, an expert in European geopolitics and international security and director of the Europe, Russia, and Eurasia program at the London-based Chatham House think tank, called the Ukrainian drone attack on the Moscow Oil Refinery "the most interesting development over the past year."

The incident underscored Ukraine's growing military confidence and gave Kyiv the understanding that it must continue striking Russia "where it hurts the most" by reducing its energy revenues, Roos said.

"This is a bad time for Russia. The number of bankruptcies [among small and medium-sized enterprises] is growing," Roos told CNBC.

Officially, Russia's inflation rate stood at 5.6% year-on-year as of mid-June, down from the previous month, according to the Bank of Russia. However, Swedish intelligence estimates suggest the real inflation rate in Russia could reach 15%.

"Even when oil prices skyrocketed and reached an all-time high at the peak of the war in the Middle East, Russia did not increase its production. So yes, it got a windfall, but production did not increase — so the consequences were quite limited," Roos said.

He also emphasized that it is difficult to imagine how Putin can exit the war without losing face and potentially losing power as a result.

"It's like climbing high into the mountains. Once you've chosen a path, there is no turning back," he added.

"That is exactly what makes him dangerous for Europe, because the risks of escalation are always there."

Natia Seskuria, an associate fellow in Russian and Eurasian security at the London-based Royal United Services Institute (RUSI), called Ukraine's campaign of medium- and long-range drone strikes against Russia "really significant."

"Ukraine is effectively showing the Russians that the cost of the war is only increasing. Not only for Putin's regime but also for ordinary Russians," Seskuria said.

For a very long time, Putin convinced Russians that Crimea was safe and the war would not come near their homes, the expert noted.

"Now we see that they are facing the most serious fuel crisis in many years," she said.

While it is too early to draw conclusions about the extent to which Ukraine can fully isolate Crimea, continued attacks on the peninsula will likely significantly complicate Russia's summer offensive, Seskuria added.

Russian authorities recently suspended fuel sales to the public in occupied Crimea due to Ukrainian attacks.

Christopher Granville, managing director at TS Lombard, believes that "the endgame is near, and so now we have the risk of escalation."

"Russia's territorial goals are now limited to the remaining northwestern corner of Donetsk Oblast, which is the last part of the Donbas," Granville said.

He added that it might take Russia "six months to capture one or, at most, two settlements," and that two settlements in the Donbas — the cities of Kostyantynivka and Lyman — are under threat of capture.

Granville also noted that the region's two largest cities — Kramatorsk and Slovyansk — have not yet fallen under the control of Russian forces.

"So you could potentially reach this point in 12 months; in other words, you can see the end point," he said.

However, Granville clearly noted that the same 12-month timeframe could apply to an alternative scenario — continued Ukrainian pressure on Russian logistics and society, "which will lead to Russia agreeing to a ceasefire on a front line that will not meet its current territorial goals."